Preamble

The House met at half-past Two o'clock

PRAYERS

[Mr. SPEAKER in the Chair]

Oral Answers to Questions — UNITED NATIONS

Permanent Force

Mr. A. Henderson: asked the Secretary of State for Foreign Affairs to what extent it is the policy of Her Majesty's Government to support the establishment of a United Nations Permanent Force, as distinct from a United Nations Stand-by Force.

The Secretary of State for Foreign Affairs (Mr. Selwyn Lloyd): As has been stated in the House on a number of occasions, Her Majesty's Government support the principle of a United Nations Permanent Force. The establishment of such a force would require a wide measure of agreement. That does not at present exist. Meanwhile, we support the ideas of the United Nations Secretary-General for a Stand-by Force.

Mr. Henderson: Pending further examination of this proposal for a United Nations Permanent Force, will the Secretary of State consider studying, or asking his Department to study, the possibility of a small, individually recruited force as a nucleus to be supplemented by a stand-by contingent from members of the United Nations?

Mr. Lloyd: I will certainly study the suggestion of the right hon. and learned Gentleman.

Mr. Usborne: In view of the fact that a permanent United Nations police force would obviously require bases of its own under the ownership of the United Nations, would this country be prepared to provide same territory and hand it over to the United Nations as a United Nations base?

Mr. Lloyd: I think that the hon. Gentleman is more likely to get his objective achieved if he will postpone consideration of that kind of practical matter until the scheme is a little nearer fruition.

Special Fund

Mr. Osborne: asked the Secretary of State for Foreign Affairs how much Mr. Paul Hoffman recently officially requested from him for the United Nations Special Fund; how much he was promised; and if he will make a statement.

Mr. Selwyn Lloyd: I regret that I did not myself see Mr. Hoffman because I was in Washington. He had a number of conversations with other Ministers. These were of an informal nature, and he made no official requests to Her Majesty's Government. I have no statement to make at present about the Special Fund.

Mr. Osborne: Will my right hon. and learned Friend use his influence with the Treasury to try to get it to give a little more to this fund, because it is to be used for accelerating the economic development of the less-developed countries, and this is of vital importance to the peace of the world? Since Mr. Paul Hoffman has said that the amount for which the fund is already asking is mere peanuts, will my right hon. and learned Friend do what he can to see that the Treasury look at this question with a favourable eye?

Mr. Lloyd: We have already offered. I believe, the equivalent of 1 million dollars, but the governing council of this Special Fund has not yet approved any projects. We must see how it works out in practice.

Algerian Refugees

Mr. Younger: asked the Secretary of State for Foreign Affairs what contribution Her Majesty's Government will make in response to the special appeal of the United Nations' High Commissioner for Refugees for a relief fund to aid Algerian refugees in Tunisia and Morocco.

Mr. Selwyn Lloyd: This matter is under consideration.

Mr. Younger: Is it not a fact that the United States Government have made some contribution to this appeal and can


the Minister assure us that Her Majesty's Government will make a contribution fairly soon?

Mr. Lloyd: The matter is under consideration.

Oral Answers to Questions — NUCLEAR TESTS

Mr. A. Henderson: asked the Secretary of State for Foreign Affairs (1) to what extent it is now the policy of Her Majesty's Government that the personnel of all control posts established for the purpose of enforcing any agreement for the discontinuance of nuclear tests should not include representatives of the country in which such posts are situated;
(2) to what extent it is now the policy of Her Majesty's Government that the personnel of teams inspecting suspected nuclear explosion sites should not be composed of nationals from the country being inspected accompanied by foreign observers.

Mr. Selwyn Lloyd: The composition of the personnel at control posts and of inspection teams is under negotiation at Geneva. I did, however, discuss the matter at some length both in Moscow and in Washington. I believe that this is one of the matters upon which it will be possible to reach agreement, and I hope that the right hon. and learned Gentleman will be willing to leave it at that for the time being.

Oral Answers to Questions — NILE WATERS

Mr. Philips Price: asked the Secretary of State for Foreign Affairs whether, in view of the importance of the co-operation of Ethiopia in the solution of the problem of sharing surplus Nile waters, he will approach the Government of that country with a view to securing its cooperation in summoning a conference of all States directly interested in Nile waters to consider this problem.

Mr. Selwyn Lloyd: Her Majesty's Government are fully aware of the importance of an equitable settlement of the problem of the Nile waters which safeguards the interests of all users. The House may be aware that there have recently been some preliminary contacts

betweeen the two major users. I will naturally consider in what ways Her Majesty's Government might help at the appropriate time.

Oral Answers to Questions — ANGLO-SOVIET CULTURAL AGREEMENT

Mr. Osborne: asked the Secretary of State for Foreign Affairs why the Anglo- Soviet cultural agreement was recently signed without agreement being reached to end the jamming by Moscow of the British Broadcasting Corporation's Russian language broadcasts, or to provide for increased sales of British newspapers and periodicals being allowed inside Russia.

Mr. Selwyn Lloyd: The agreement mentioned by my hon. Friend was the result of negotiations on a programme of Anglo-Soviet exchanges for 1959–60 between the Soviet Relations Committee of the British Council and the Soviet State Committee for Cultural Relations with Foreign Countries. Such matters as the jamming of broadcasts and the circulation of newspapers in the Soviet Union are subjects for inter-governmental discussion and as such were outside the scope of these particular negotiations.

Mr. Osborne: Since improved relations between Russia and ourselves depend upon a better understanding of each other's situation between the two countries, is not the jamming of the Russian-language broadcasts of the B.B.C. the central problem? Have the Russian Government given reasons why they still refuse to allow B.B.C. broadcasts to be received in their country?

Mr. Lloyd: I agree with my hon. Friend about the importance of this matter, but one of the satisfactory features of the recent agreement was that it was agreed that representatives of the two Governments would meet at intervals to discuss these matters. I think that the point which my hon. Friend has mentioned is a very suitable matter for discussion at the first meeting.

Mr. Emrys Hughes: In view of the fact that the Prime Minister paid such a glowing tribute to the Soviet Union and referred to Russia as the promised land in a speech at the British Embassy,


which the right hon. and learned Gentleman will remember, is there any need to have discussions about this jamming business?

Mr. Lloyd: Without accepting the accuracy of the preliminary part of the hon. Gentleman's suggestion, I rather gather that he supports my hon. Friend the Member for Louth (Mr. Osborne).

Oral Answers to Questions — EUROPEAN SECURITY

Mr. Shinwell: asked the Secretary of State for Foreign Affairs (1) what communication he has received from the German Federal Government with regard to their intention not to press at present for the reunification of East with West Germany;
(2) What communication he has received from the German Federal Government with regard to the return of former territories now under Polish administration.

Mr. Swingler: asked the Secretary of State for Foreign Affairs (1) on what dates and in what form precise proposals for a frozen or thinned-out zone in Central Europe have been made by Her Majesty's Government to the other members of the North Atlantic Treaty Organisation;
(2) when he expects to be able to announce results from the further study of the possibilities of increasing security by some method of limitation of forces and weapons in an agreed area of Europe, referred to in the Anglo-Soviet Prime Ministers' communiqué of 3rd March;
(3) to what extent, at the recent meeting of the North Atlantic Treaty Organisation's Foreign Ministers, consideration was given to proposals for increasing security by the limitation of forces and weapons in an agreed area of Europe.

Mr. Harold Davies: asked the Secretary of State for Foreign Affairs what proposals for disengagement and disarmament in Central Europe were put forward by Her Majesty's Government at the recent North Atlantic Treaty Organisation meeting.

Mr. Warbey: asked the Secretary of State for Foreign Affairs (1) what discussions took place at the

recent Western Foreign Ministers' Conference on British proposals for disengagement, thinning-out, freezing or equalisation of forces in an agreed part of Europe;
(2) what progress has been made with the study of the possibility of increasing security by some method of limitation of forces and weapons, both conventional and nuclear, in an agreed area of Europe referred to in the Anglo-Soviet communiqué of 3rd March.

Mr. S. Silverman: asked the Secretary of State for Foreign Affairs (1) whether he will, as a compromise between the Franco-German demand for a controlled armaments zone stretching from the Atlantic to the Urals, and the British plan for a narrow zone, propose to the Foreign Ministers' Conference a policy of disengagement and controlled disarmament and withdrawal of foreign forces in an area covering West arid East Germany, Poland, Czechoslovakia and Hungary;
(2) to what extent he is prepared to insist at the Foreign Ministers' Conference that an agreement on disengagement and the Rapacki Plan is preferable to the continuation of the existing situation.

Mr. Bevan: asked the Secretary of State for Foreign Affairs, in view of the statement in the communiqusé issue at the conclusion of the talks between the Prime Minister and Mr. Khrushchev relating to the desirability of further study of the possibilities of increasing security by some method of limitation of forces and weapons, both conventional and nuclear, in an agreed area of Europe, coupled with an appropriate system of inspection, what proposals were in consequence made to Dr. Adenauer; and what response was received.

Mr. Selwyn Lloyd: The Western Allies are preparing for important negotiations with the Soviet Union. In the course of these preparations many aspects of the problems of Germany and European security are under review. But these discussions are confidential and, to be of value, must remain so. Therefore, I think it is wiser for me not to say whether or not there have been communications between the Governments concerned on particular topics, or to reveal


the extent to which or the form in which particular ideas have been formulated and discussed. We are seeking agreement with our Allies on how to handle these negotiations in such a way as to achieve our objectives of reducing tension and preserving peace and security in Europe, whilst safeguarding the position of the people of West Berlin. I have, of course, taken careful note of the points made in all these Questions, but I hope that the right hon. and hon. Members will not press me further.

Mr. Shinwell: As regards Questions No. 8 and No. 9, while appreciating the need for these discussions remaining confidential, may I ask the right hon. and learned Gentleman whether he agrees that it is desirable that hon. and right hon. Gentlemen should be advised of the actual position of the German Federal Government in relation to some of these matters? For example, are not we in this country displaying rather more enthusiasm for German re-unification than is apparently shown by the Germans themselves? Is there not a difference of opinion in Germany itself on that issue?
As regards Question No. 9— [HON. MEMBERS: "Oh."]—if all these Questions are taken together, we are entitled to ask questions. In any event, so long as you, Mr. Speaker, do not shout me down, nobody on the other side will. As regards Question No. 9, may we be assured that we shall not be involved in any dispute which concerns the return of the former German territories from Poland?

Mr. Lloyd: I quite understand the right hon. Gentleman's desire for more information on some of these matters, but the difficulty is that many of them are matters for negotiation. It is true that there are differences of opinion. There are differences of opinion between Governments and there are differences within countries on the importance to be attached to some of the matters. However, the right hon. Gentleman made the point for me when he said that it was important that these negotiations should remain confidential, and I think that in those circumstances it is better for me not to make further comment, except that I agree upon the importance of the matters to which the right hon. Gentleman has drawn attention.

Mr. Swingler: Has not the Foreign Secretary noted that in his television

broadcast Dr. Adenauer stated that the British Government had not put forward any precise proposals concerning a neutral, thinned-out, or frozen zone in Europe? As the head of one of the Governments concerned in the negotiations has made this assertion, are not we entitled to know whether that assertion is accurate and whether the British Government have put forward precise proposals? As there is controversy about this, are not we entitled to know something about the nature of the proposals?

Mr. Lloyd: The hon. Gentleman is seeking to draw me away from the position which I have taken up. I think that it would be unwise for me to indicate to what extent plans have been precisely formulated. While matters are in course of confidential discussions between Governments, it would be wrong for me in public to reveal our position.

Mr. Bevan: Is that the case? Why are there more inhibitions upon the Foreign Secretary of Great Britain than upon the Chancellor of Germany or upon the President of France? Why is the right hon. and learned Gentleman so much more reticent than they about this matter? Dr. Adenauer's statement was very precise. Has not the right hon. and learned Gentleman's attention been called to this:
Well, I have just now once again had a very careful check made on whether Great Britain has ever made a precise proposal—and one can only discuss precise proposals. I have established that this theme has always been mentioned in only a very vague manner, so that discussion of it was not at all possible"?
Last night the right hon. and learned Gentleman— [HON. MEMBERS: "Speech."] There are many Questions on the Order Paper on this matter and they have been taken together, so, with all respect, I think that we might be permitted to ask extended supplementary questions. I have a Question which was included. We have had an omnibus reply about the Oder-Neisse line and dis-engagement in Europe. Last night, the right hon. and learned Gentleman was asked on the radio by his interrogator:
But how about this plan for a freezing of forces … doesn't that exist any more then?
The right hon. and learned Gentleman replied:
Oh, it is certainly an idea.

Hon. Members: Question.

Mr. Bevan: I am asking a question. I am asking the right hon. and learned Gentleman to clarify the position.

Sir H. Studholme: On a point of order. Is it in order for the right hon. Gentleman to read out supplementary questions?

Mr. Speaker: A short quotation is always allowed.

Mr. Bevan: I think that I have sinned less than any other Member in the House in that matter. The Foreign Secretary said:
Oh, it is certainly an idea.
Not very ambitious—
It isn't in fact an idea for the freezing of forces

Mr. Osborne: On a point of order. The right hon. Gentleman claimed that it was in order to debate this matter— and he used the word "debate ". Is it in order to have a debate on Questions? Is it fair to those with later Questions?

Mr. Speaker: There is no Question before the House in the sense that that would lead to a debate. An hon. Member is entitled to ask a Question for information. I hope that this exchange will not degenerate into a debate, particularly in view of the attitude taken by the Foreign Secretary, that it would be unwise for him to say anything. If we can get on, we might get Answers to some other Questions.

Mr. Bevan: Further to that point of order.

Mr. Shinwell: On a point of order. You have just observed, Mr. Speaker, that we are entitled to ask Questions for the purpose of eliciting information. That is precisely what I endeavoured to do, but the right hon. and learned Gentleman declined to give me any. What am I to do?

Mr. Speaker: A Minister is always entitled to refuse to answer Questions. That is something over which I have no control. As we have many Questions on the Order Paper, some of which may receive Answers, I suggest that the more speedily we get over this, the better.

Mr. Bevan: Many Questions were listed by the right hon. and learned Gentleman in his comprehensive reply. With all

respect, it is not in the slightest relevant if the right hon. and learned Gentleman says that he would not like to give the information. We are still entitled to try to get it. I ask him how it comes about that Dr. Adenauer states that no precise proposals were made and the right hon. and learned Gentleman says that proposals were made. Last night on the radio he took away all the significance from the Prime Minister's visit to Bonn.

Mr. Lloyd: I am not very clear what the supplementary question is. The idea of agreed zones in which there would be inspection and controls of armaments remains a proposition which Her Majesty's Government think of great value. The right hon. Gentleman did not continue to quote me. I said that exactly in what relationship to other proposals that would be put forward remained to be discussed and agreed. What I am concerned with is the success of these negotiations. If the right hon. Gentleman is equally concerned, he will understand the impossibility of revealing confidential discussions with Allies.

Mr. Warbey: Does the right hon. and learned Gentleman's reply to my right hon. Friend mean that the Government have completely thrown over the idea of any reduction of forces on both sides in Central Europe as a part of an agreement? If so, how can he possibly hope that there will be any agreed settlement when the conferences come along?

Mr. Lloyd: The hon. Gentleman asked me whether I had thrown over the idea of reductions. I have certainly not thrown over the idea.

Mr. H. Morrison: Is not it the case that the two sectors of Germany have an elementary right to unification? Is not it wrong that anybody should stand in the way of uniting the two parts of the country? Was not the question of the frontier between Poland and Western Germany deliberately left over for the peace conference?

Mr. Lloyd: The right hon. Gentleman is absolutely right. He will remember the declaration of the Federal Government. They undertook never to have recourse to force to achieve the reunification of Germany.

Mr. Ellis Smith: Germany caused two world wars.

Dame Florence Horsbrugh: Is my right hon. and learned Friend aware that the enormous majority of people in this House and outside wish only for the success of this conference, and applaud the Foreign Secretary's decision in taking no risk of giving away any information before the start of negotiations?

Mr. S. Silverman: Does the right hon. arid learned Gentleman realise that although nobody is asking him to give away in advance whatever he may conceive to be the course of the negotiations, or his detailed contributions to them, there is nevertheless a difference between that and denying to our people any knowledge whatever of what is going to be said in their name at a most important juncture of human affairs?
With regard to Question No. 24, will the Foreign Secretary say whether it is still the Government's view that it would be a good thing if Soviet forces withdrew from East Germany, Poland, Czechoslovakia and Hungary, but that there is no hope whatever of getting such a withdrawal unless the other principle which the Government have put forward is also followed, namely, that no such changes shall take place which alter the balance of military forces on one side or the other?

Mr. Lloyd: Her Majesty's Government's policy on that point has repeatedly been made clear. It was made clear in the last foreign affairs debate and in December. There is no question of concealing from the people of this country our view on that matter.

Mr. Harold Davies: I appreciate the Foreign Secretary's desire not to make completely public his proposals, but the question before the House is a simple one. Have proposals been made? Has the Minister considered, or will he consider, the proposals suggested by the German Social Democrats concerning the possibility of federation between East and West Germany in a transition period? Since he desires to keep the temper of peace, will he suggest to the N.A.T.O. generals that they should not make belligerent statements while negotiations are going on?

Mr. Lloyd: I am all for a reduction of belligerent statements while negotiations are proceeding, or at any time. As for the question of the precise proposals

that have been made, I wish the House would understand that we are still in the process of preparation. No decisions have been reached.

Mr. Davies: That is what we wanted to know.

Mr. Lloyd: The Working Group met and produced a report. An agreed directive was given to it by the four Foreign Ministers to do further work, and in Paris, on 28th April; we will review the Working Group's work and make decisions as to our future attitude. To go into negotiations saying, "This is our first position; if you will not have it, this is our second position; we are a little uncertain about the position of our Allies on this point, so do not ask about that; if you will not have that, this is our third position ", would be utterly futile.

Oral Answers to Questions — PASSPORTS

Dame Irene Ward: asked the Secretary of State for Foreign Affairs on what grounds he has announced a 100 per cent. increase in the charge for passport renewals.

Mr. Selwyn Lloyd: This question was dealt with fully in the reply which my hon. Friend gave to the hon. Member for Enfield, East (Mr. Ernest Davies) on 13th April. I have nothing to add.

Dame Irene Ward: Is my right hon. and learned Friend aware that that Answer was entirely and absolutely unacceptable to the vast number of people interested in extending travel as widely as possible? Will the Foreign Secretary's decision involve an Order in Council, or any Parliamentary procedure which will enable a vote of the House to take place? If not, may I give notice that I shall raise the matter at the earliest possible moment on the Adjournment?

Hon. Members: Answer.

Dame Irene Ward: On a point of order.

Mr. Speaker: The hon. Lady has given notice that she will raise the matter on the Adjournment.

Dame Irene Ward: I have not given notice that I wish to raise this matter on the Adjournment but, in order to make it doubly sure, may I give notice that I will raise the matter on the Adjournment


and, at the same time, have private conversations with my right hon. and learned Friend?

Oral Answers to Questions — GERMANY

Nuclear Weapons

Mr. Warbey: asked the Secretary of State for Foreign Affairs what decisions were taken at the recent council meeting of the North Atlantic Treaty Organisation regarding the arming of West German forces with nuclear weapons.

Mr. Selwyn Lloyd: The position remains as set out in my answer to the right hon. Member for Ebbw Vale (Mr. Bevan) on 2nd December last and in the reply given by my right hon. Friend the Prime Minister to the hon. Member on 9th April.

Mr. Warbey: Can the Foreign Secretary confirm the disturbing reports that the arming of German forces with nuclear weapons is being speeded up so that in the event of a freeze of nuclear weapons being agreed upon at a later date Western Germany will already qualify as a member of the nuclear arms club?

Mr. Lloyd: I should like to have particulars of any reports before I comment upon them, but if the hon. Member will study the reply given to the right hon. Member for Ebbw Vale (Mr. Bevan) on 2nd December, he will see that there is no idea of the Federal German Republic becoming a member of what he calls the nuclear club.

Unification

Mr. Zilliacus: asked the Secretary of State for Foreign Affairs whether he will, at his talks with the French Prime and Foreign Ministers, propose a joint endorsement by the two Governments of President de Gaulle's recent declaration that the unification of Germany must be accompanied by that country's acceptance and international recognition of its existing frontiers.

Mr. Selwyn Lloyd: These talks are now concluded.

Mr. Zilliacus: Would not the right hon. and learned Gentleman state now that, in view of the length of time that has passed, it is too late to reopen the question of the German eastern frontier

and that the present frontier is the only basis on which there can be unification of Germany by agreement?

Mr. Lloyd: That supplementary question and others like it were dealt with in my reply to Question No. 8.

Oral Answers to Questions — JORDAN (GRANTS AND LOANS)

Mr. Lipton: asked the Secretary of State for Foreign Affairs how much money has been granted and loaned to the Government of Jordan since 1945; and how much of the amount loaned has been repaid.

Mr. Selwyn Lloyd: As this Answer includes a number of figures I will, with permission, circulate it in the OFFICIA1 REPORT.

Mr. Lipton: As the figures will no doubt show that a very considerable sum is involved, either by way of gift or loan, can the Foreign Secretary say whether, in his opinion, this country and our taxpayers have had value for the money given to Jordan? Will he also say whether the visit of the Jordanian Prime Minister is connected with any further demand for money from the British Exchequer?

Mr. Lloyd: I am glad that the hon. Member has asked me that question because it enables me to inform him that we have in fact agreed to give a grant in aid of £2 million to the Jordanian Government for the financial year ending 31st March, 1960, and an interest-free development loan of £500,000 towards the desert road project. Whether or not the money is well spent is a matter of opinion, but we have traditionally had certain links of friendship with Jordan and in my view we are right to extend this aid.

Mr. Bevan: Is it not rather extraordinary that a decision to make a further grant of £2 million, and a development loan of £500,000 should be incidentally made known to the House as a result of a supplementary question?

Mr. Lloyd: The hon. Member asked me whether any further aid would be given. If it were not for the fact that I believe this is being announced later today in the Jordanian Parliament, I


would not have dealt with the matter by way of a supplementary answer.

Following is the information:
The money paid to Jordan since 1945 falls under three main heads:
First, the subsidy paid in accordance with the terms of the Anglo-Jordan Treaty of 1946, amounting to a total of £72,144,966 (£61,022,018 of which was paid from the Foreign Office Vote and the remaining £11,122,948 from the War Office Vote);
Secondly, contributions in respect of Palestine pensions which, up to March, 1958, amount to £1,805,749;
Thirdly, a grant in aid, amounting to £1 million, paid in the Financial Year 1958–59. The total amount lent to the Government of Jordan is £8,650,000, which represents the sum total of the series of development loans made since 1949. Of this amount, £133,333 6s. 8d. has so far been repaid.

Oral Answers to Questions — NUCLEAR TESTS (GENEVA CONFERENCE)

Mr. Frank Allaun: asked the Secretary of State for Foreign Affairs if he will make a statement on progress made at the Geneva Conference on nuclear test explosions.

Mr. Bevan: asked the Secretary of State for Foreign Affairs if he will arrange for the publication of a White Paper dealing with the progress made and the issues still outstanding at the Geneva Conference on the Discontinuance of Nuclear Tests.

Mr. Beswick: asked the Secretary of State for Foreign Affairs if he is now in a position to make a further statement about the progress of the Geneva Conference on the suspension of nuclear tests.

Mr. Selwyn Lloyd: I apologise for the length of this reply, but I know that the House is interested in this matter.
The Conference resumed on 13th April. Her Majesty's Government's aim is still an agreement to discontinue all tests under effective international control. We hope, therefore, that the Union of Soviet Socialist Republics will withdraw their insistence on a comprehensive veto in the Control Commission, particularly on procedures for on-site inspection, and also their refusal to join in discussing technical problems involved in the detection of high altitude and underground tests.
We have, however, also put forward an alternative position. We have said that. if the Soviet Union cannot bring itself to take the steps necessary to make a comprehensive ban possible, we support the proposal to approach a comprehensive ban by stages. The first stage would consist of a ban on tests from the earth's surface up to fifty kilometres and underwater tests. Such an agreement could be policed by the controls on which agreement at present seems feasible. It would only require land and ship control posts and aircraft flights. On-site inspections would not be necessary. We could continue without interruption efforts to work on the technical problems in detecting tests underground and at very high altitudes. As soon as satisfactory control provisions to cover these points had been agreed and incorporated in the treaty, tests in these environments would also be forbidden.
We would much prefer a comprehensive agreement, but if that is not possible then the alternative would be a step forward.
In the period before the Easter Recess the Conference agreed three further articles including one on the duration of the treaty and since the Recess a further article on amendments to the treaty has been agreed. For the present I regret that it is not practicable to issue a White Paper.

Mr. Allaun: Will the Foreign Secretary state whether, if agreement is reached on stopping atmospheric tests as a first step, the West would then agree to negotiate on stopping underground and stratospheric tests as well? Secondly, does not he think this an ideal occasion for limited unilateral action as a means of setting an example to dispel the suspicion which exists?

Mr. Lloyd: Regarding the first part of the hon. Gentleman's supplementary question, I think it is implicit in my Answer that we do envisage such negotiations proceeding, with certain technical discussions on the problems involved. Regarding the second part of his supplementary question, I do not think the time has yet arrived for that. We still hope the Russians will accept a proposal for a comprehensive ban. Then there is the alternative suggestion to be considered; and, when we have the Soviet reaction to


that, there arises the matter to which the hon. Gentleman referred.

Mr. Beswick: Is not it a fact that the Foreign Secretary and the Government could have a comprehensive ban tomorrow if they wished, and that the difficulty is that they are requesting unlimited inspection on what is, after all, a very limited amount of disarmament, namely, the suspension of nuclear tests? Can the right hon. and learned Gentleman say why the proposals to which the Soviet Union have already agreed, for inspections throughout the country with non-Russian observers at those inspections, are not considered acceptable by the Government?

Mr. Lloyd: We have not asked for, unlimited inspection. The position of the Soviet Union is that there should be a Soviet veto on whether a complaint is made and also whether any inspection on an alleged complaint takes place. As far as any control system is concerned, I should have thought that quite an impossible situation to accept. With regard to the latter matter to which the hon. Gentleman referred, I dealt with that in my Answer to the right hon. and learned Member for Rowley Regis and Tipton (Mr. A. Henderson) earlier today.

Viscount Hinchingbrooke: Is the link, which is very necessary from the British point of view, between the suspension of nuclear tests and conventional disarmament being fully maintained in Geneva?

Mr. Lloyd: This is a question of stopping tests and we have never accepted that as being actual disarmament. I agree with my noble Friend that, given a measure of disarmament, it is important to keep the link between conventional and nuclear disarmament.

Mr. Bevan: The right hon. Gentleman has said he did not think it was wise to issue a White Paper at this stage. He will remember that last year he seemed rather to favour that idea. Now we cannot get it. I am sure he will appreciate the difficulty which we are in all the time. Is it the fact that when he says "we " he means the Western Powers and that the Russians are " they "—" They say that "—whereas, of course, there are all kinds of rumours to the effect that

there is not complete unanimity between the Western approaches to this matter and that resistance to progress is not always entirely on the Russian side?

Mr. Lloyd: I should very much like to issue a White Paper, but it is rather the same position that we had when the Sub-Committee on Disarmament met privately and kept its own records. If one side publishes, all will think they are entitled to; so that difficulty is inherent in this method of negotiation.

Oral Answers to Questions — IRAQ (SUPPLY OF ARMS)

Mr. Healey: asked the Secretary of State for Foreign Affairs what arrangements he has made to co-ordinate British and Soviet supplies of arms to the Iraqi Government under obligations to which Her Majesty's Government are a party.

Mr. Selwyn Lloyd: I am not clear what obligations the hon. Member has in mind, but in any case the Answer is that no such arrangements have been made.

Mr. Healey: Does not the Foreign Secretary feel that, instead of competing with the Soviet Government for first place as the arsenal of Communism in the Middle East, it would be wiser to reach agreement with it about limiting arms deliveries to all the countries in this very unsettled area?

Mr. Lloyd: I do not accept the inference in the hon. Gentleman's supplementary question. Regarding the Question on the Order Paper, I do not think that either the Soviet Union or Iraq would welcome such an arrangement; and that sort of agreement, without the consent of Iraq, is just a way of affronting nationalist sentiment.

Oral Answers to Questions — MALAYA (COMMONWEALTH FORCES)

Mr. Harold Davies: asked the Secretary of State for Foreign Affairs what decisions were taken at the recent South-East Asia Treaty Organisation Conference concerning the use of Commonwealth forces stationed in Malaya for the purposes of the South East Asia Treaty Organisation; and what representations he has received from the Government of the Federated Malay States on these decisions.

Mr. Selwyn Lloyd: No such decisions were reached and no representations have been made by the Malayan Government.

Mr. Davies: I welcome that reply. May I ask the Minister to assure the House that the British Government at least will take no lead in introducing nuclear or atomic weapons into South-East Asia?

Mr. Lloyd: That is a different question. I do not know of any plan to do anything of the sort. I have answered the Question that is on the Order Paper. If the hon. Gentleman puts down another Question I will try to answer it.

Mr. Davies: While agreeing that at this juncture there may not be any such plan, may 1 say that there are rumours in influential quarters in South-East Asia that this idea exists and that pressure is being brought on Laos to join S.E.A.T.0.—[HON. MEMBERS: " Question.") —and this can—

Mr. Speaker: Order. The hon. Member seems to be making a number of statements. I have not yet heard his question.

Mr. Lloyd: If I am correct in detecting a question in the latter part of the hon. Gentleman's observations, I would reply that there is no question at all of any pressure being brought to bear on Laos to join S.E.A.T.O. at the present time.

Oral Answers to Questions — MIDDLE EAST (U.N. CHARTER OBLIGATIONS)

Mr. Harold Davies: asked the Secretary of State for Foreign Affairs whether, in his talks on the Middle East with the French Prime Minister and Foreign Secretary, he will propose the issue of a joint declaration affirming strict respect for the obligations of the United Nations Charter concerning non-interference in the internal affairs of other States, and, in particular. opposition to any policy of intervention, direct or indirect, political or military, in the internal affairs of Iraq.

Mr. Selwyn Lloyd: These talks were concluded yesterday.
Whether or not such a declaration would have been desirable, it would certainly be unnecessary in view of the terms of the United Nations resolution

unanimously carried on 21st August, 1958. That remains our policy. I am sending a copy of the resolution to the hon. Member and I draw his attention in particular to paragraphs 1 and 2.

Mr. Davies: Without, I hope, getting out of order on this occasion, may I ask the Foreign Secretary whether he would think it worth while to produce a White Paper on British Government policy in the Middle East in view of the complete change of policy since the days of the first Bagdad Pact?

Mr. Lloyd: I will certainly consider that suggestion.

Mr. Zilliacus: asked the Secretary of State for Foreign Affairs whether, in view of the present situation in Iraq and Iran, and in the relations between the former and Egypt, he will press for the conclusion of an agreement between the four great Powers who are permanent members of the Security Council to implement the obligations of the United Nations Charter concerning non-interference in the internal affairs of other countries, joint action to control the traffic in arms, keep the peace and give economic and technical aid to Middle Eastern countries, and an abandonment of the policy of recruiting States in this area into military alliances with any of the great Powers.

Mr. Selwyn Lloyd: I would refer the hon. Member to the Answer which I have given to Question No. 23. I am sending him a copy of that resolution. The Union of Soviet Socialist Republics also voted for it. So far as economic and technical aid is concerned, we would welcome any scheme for that which has the support of the States in the area.

Mr. Zilliacus: As well as expressing my gratification for that reply, may I ask whether the right hon. and learned Gentleman will give an assurance that this means that there will be no repetition of the Jordan policy in case of internal disorders in either Iraq or Iran under the Bagdad Pact or any other agreement?

Mr. Osborne: Or in Tibet?

Mr. Lloyd: That is a very different question from the one on the Order Paper. But our policy on that is as decided unanimously in the resolution to which I have referred.

Oral Answers to Questions — UNITED KINGDOM AND FRANCE

Mr. S. Silverman: asked the Secretary of State for Foreign Affairs what suggestions have been made by the French Government concerning a modification of the French position in regard to British policies in Europe, in exchange for some form of British support or at least acquiescence towards French policies in North Africa.

Mr. Selwyn Lloyd: None, Sir.

Mr. Silverman: Will the right hon. and learned Gentleman assure the House that the Government will at no time enter into any such dishonourable bargains?

Mr. Lloyd: I have dealt with the Question on the Order Paper which asked whether any suggestion has been made. I do not think it right to expect me to deal with a hypothetical question.

Oral Answers to Questions — SUMMIT CONFERENCE

Mr. Zilliacus: asked the Secretary of State for Foreign Affairs whether he will give an assurance that the Government supports the early holding of a Summit Conference regardless of the outcome of the impending Foreign Ministers' Conference.

Mr. Selwyn Lloyd: Her Majesty's Government's Note of 26th March stated their position clearly. I repeat the words used:
The purpose of the Foreign Ministers' meeting should be to reach positive agreements over as wide a field as possible, and in any case to narrow the differences between the respective points of view and to prepare constructive proposals for consideration by a conference of Heads of Government later in the summer. On this understanding and as soon as developments in the Foreign Ministers' meeting warrant holding a Summit Conference, Her Majesty's Government will be glad to participate in such a conference. The date, place and agenda for such a conference will be proposed by the meeting of Foreign Ministers.

Mr. Zilliacus: Does that reply mean that there will be a Summit Conference whether the amount of agreement reached at the Foreign Ministers' Conference is considerable, small or negligible?

Mr. Lloyd: This formulation was carefully worked out. I think that my right hon. Friend the Prime Minister has

already answered a supplementary question very much similar in form to that just put by the hon. Gentleman. I have nothing to add to what my right hon. Friend said.

Oral Answers to Questions — TIBET

Mr. Younger: asked the Secretary of State for Foreign Affairs whether he is now in a position to make a statement about refugees attempting to leave Tibet, in the light of official information available to him from first-hand witnesses.

Mr. Philips Price: asked the Secretary of State for Foreign Affairs what official information is now available to him from first-hand witnesses of recent events in Tibet; and whether, in view of the fact that under the Anglo-Russian Convention of 1907 Chinese suzerainty over Tibet was recognised on condition that China respected Tibetan autonomy, he will now reconsider the whole matter and the question whether Chinese suzerainty in future should be recognised there at all.

Mr. Selwyn Lloyd: I am not in a position to make a statement about refugees. As hon. Members know, communications are extremely difficult in the part of India where the Dalai Lama and his party are. I share the general feeling of deep concern with regard to what has been happening in Tibet, and about Tibetan autonomy. I am sure that the whole House sympathises with the Tibetan people in their present troubles. With regard to the juridical point, I have nothing to add.

Mr. Younger: While I appreciate the great difficulty of getting exact information, may I ask the right hon. and learned Gentleman whether he would agree that it is almost certain that there will be some refugees, possibly not large numbers? Is he contemplating any discussions to ensure that these refugees will be received and that possibly, and if necessary, they will become an international responsibility?

Mr. Lloyd: We have been in touch with the Indian Government on this matter. I prefer to add nothing to my reply.

Mr. Philips Price: Would not our non-recognition of Chinese sovereignty over


Tibet be of some assistance to a future Tibetan Government?

Mr. Lloyd: That may be so.

Sir H. Studholme: Is my right hon. and learned Friend aware how glad the people of this country will be that he has expressed the concern which is felt at the brutal act of aggression by the Chinese on a small and peace-loving State? Would it not be a very good thing for the world to realise how fortunate the world was during the time of the Pax Britannica, when Britain acted as the policeman of the world— [HON. MEMBERS: "Suez."] —and was in a position to prevent such acts of aggression from happening?

Mr. Lloyd: There is a great deal in what my hon. Friend says.

Mr. Bevan: Is the right hon. and learned Gentleman aware that in the very perplexing and difficult situation that exists in that part of the world, where precise information is difficult to obtain, we, on this side of the House, feel that we can tentatively support the position taken up by the Indian Government who have much more knowledge of the situation than we have?

Mr. Lloyd: It bears a marked similarity to our own.

Oral Answers to Questions — SOUTH EAST ASIA (ECONOMIC AID)

Mr. Rankin: asked the Secretary of State for Foreign Affairs why the Council of Ministers at the recent meeting of the South East Asia Treaty Organisation in New Zealand rejected the appeal of the Asian members for increased economic aid.

Mr. Selwyn Lloyd: It is not correct to say that the Council of Ministers "rejected the appeal "of the Asian members for increased economic aid. I would refer the hon. Member to the relevant sections of the communiqué issued after the Council meeting, a copy of which I am placing in the Library of the House. This enumerates a considerable number of fields in which action is being taken or is under consideration. Her Majesty's Government were very glad to be able to announce at the meeting that they would make a contribution of £50,000

towards the South East Asia Treaty Organisation Graduate School of Engineering which is due to open in Bangkok in September of this year. I would, however, like to remind the House that Her Majesty's Government's primary instrument of economic aid in the area is the Colombo Plan.

Mr. Rankin: May I take it from that Answer that the matter is still under consideration and that the right hon. and learned Gentleman may reconsider what has been done, in view of the fact that the small Asian countries feel that more economic aid is necessary if they are to resist the economic offensive which is being waged by the Communist countries against them? Will the Minister keep that point in mind in reconsidering the decision which has been taken?

Mr. Lloyd: In view of that supplementary question, I will, with the permission of the House, say that, under the Colombo Plan Technical Co-operation Scheme, by Export Credits Guarantee Department Section III credits, and by loans from the United Kingdom sterling subscription to the International Bank, our grants of United Kingdom aid to S.E.A.T.O. countries, up to 31st December last year, were more than £16 million. That does not include a further credit to Pakistan, signed on 27th February this year, under the Commonwealth Assistance loan plan.

Oral Answers to Questions — EMPLOYMENT

Remploy Factory, Coventry

Miss Burton: asked the Minister of Labour the number of persons under Section 2 of the Unemployed Disabled Register coming within the catchment area of, and awaiting admission to, the Remploy factory, Coventry.

The Parliamentary Secretary to the Ministry of Labour and National Service (Mr. Richard Wood): There are at present eight such persons considered suitable by my officers for submission for employment at this factory. Two of these have been accepted by Remploy and are awaiting a vacancy.

Miss Burton: Will the Parliamentary Secretary comment on the fact that when I visited the Remploy factory last month the area liaison officer told me he could


not possibly take on more people, because of the lack of work from the Government to the factory?

Mr. Wood: I may be able to give more helpful information in answer to the hon. Lady's next Question.

Miss Burton: asked the Minister of Labour the present number of disabled people employed at the Remploy factory, Coventry; what number would normally be employed; and what would be the maximum which could be accommodated if sufficient work were available.

Mr. Wood: Fifty-nine are at present employed. The average number employed over the last five years is seventy-one. The answer to the last part of the Question is eighty-five.

Miss Burton: Could the Parliamentary Secretary comment on this fact? Is it not true that last year Government contracts to Remploy factories in general dropped considerably? Would his right hon. Friend take up the matter with the Minister of Supply, because we in Coventry are very deeply concerned about this matter?

Mr. Wood: All I can say to the hon. Lady is that my right hon. Friend is having discussions very much on this point. The particular factory in Coventry is one, as the hon. Lady knows, which does preservation, identification and packing, and it is finding orders difficult to obtain. It is on trying to stimulate orders for Remploy that my right hon. Friend's discussions are concentrated.

Travel Expenses

Mr. Spriggs: asked the Minister of Labour under what circumstances he is prepared to assist with the travel expenses of unemployed workers who, upon their own initiative find employment at varying distances from their home towns; and if he will give sympathetic consideration to the case of Mr. D. Makin, details of which have been sent to him by the hon. Member for St. Helens.

The Minister of Labour and National Service (Mr. lain Macleod): Daily travelling expenses are not payable under the Ministry's transfer schemes. These schemes are designed to help unemployed workers for whom no work is available in their home areas to transfer to employ-

ment elsewhere by contributing to the extra cost of maintaining a home in one district and living in another.
I have written to the hon. Member about the particular case of Mr. D. Makin.

Mr. Spriggs: Is the Minister aware that the individual to whom he referred in reply to me was out of work for twelve weeks with no chance of getting employment in St. Helens and that he moved out to Partington? I think it is generally understood that a wages grade man who has been out of work for twelve weeks cannot afford to pay travelling expenses and that, where it is possible for him to go home, it is in the interests of those for whom he is responsible that he should be able to get home. [HON. MEMBERS: "Speech."] I should like to appeal [HON. MEMBERS: "Question.]—may I ask the Minister if he is aware that in these cases, particularly where married men and widowed mothers are concerned, it is essential that assistance should be given?

Mr. Macleod: If the hon. Member reflects on the matter, he will see that for the Government to take on the burden of paying a contribution towards daily travelling expenses would be quite impossible. The Greater London area alone is a travel-to-work area in which 10 million people would be involved. In the particular case he mentioned this man could have been eligible for lodging allowance, but he preferred to make the sort of arrangements outlined by the hon. Member. I made this point in my letter to the hon. Member.

Cokemen, Easington

Mr. Shinwell: asked the Minister of Labour how many men described as coke-men in the Easington Parliamentary area have been made redundant in recent months and to what extent, when offered work elsewhere, they are provided with financial assistance to enable them to meet expenses.

Mr. Iain Macleod: Three hundred and ninety-eight men have been displaced since May last from the Horden and Shotton coking plants. It is not known how many of them live in the Easington Parliamentary division. I understand that all of them have been offered alternative employment by the National Coal Board which has provided special transport at


a charge of 6s. 0d. weekly for those now working at the Fishburn and Trimdon plants. Men who refused the alternative employment and cannot obtain other local work may benefit from my Department's temporary transfer scheme if they accept jobs beyond daily travelling distance of their homes.

Mr. Shinwell: Will the right hon. Gentleman look into the matter again because, according to my information, a large number of men who have been disemployed have not been able to find alternative employment and this is rather a serious matter?

Mr. Macleod: I shall certainly look into the matter again. The figures are as I gave them in my main Answer. The other figures are that forty of the men concerned refused the offer of alternative employment and twenty-two of those were registered in Easington and the other areas, so the vast majority have obtained work. If the right hon. Member thinks my figures are in dispute, of course I shall look at them again.

Oral Answers to Questions — NATIONAL SERVICE

Non-graduate Research Workers

Mr. Blenkinsop: asked the Minister of Labour whether he will agree to the continued deferment from national service of non-graduate nuclear research workers in Newcastle-upon-Tyne whose efforts to get higher qualifications would otherwise be prevented.

Mr. Iain Macleod: No, Sir. There are already arrangements whereby craft and student apprentices may be granted deferment to obtain certain qualifications, and I cannot see my way to extending them either generally or in the particular case of non-graduate research workers.

Mr. Blenkinsop: Does not the right hon. Gentleman recognise that while there has been some deferment in this case. it is most unfair to practise discrimination against any graduate who is attempting to qualify further in a field of great importance to the country?

Mr. Macleod: It is of particular importance in the last months of National Service that we should try to be fair between one person and another. It is

true that a non-graduate can be an important member of a research team, and in these cases facilities are given for both apprenticeship deferment in suitable cases and for post-apprenticeship deferment, during which higher certificates can be obtained.

Mr. Blenkinsop: Will the right hon. Gentleman at least consider the possibility of even further deferment where it can be shown that further qualifications are being sought?

Mr. Macleod: That is precisely the object of post-apprenticeship deferment. I am always prepared to see whether there can he further relaxation, and of course I will look into this matter.

Personal Case

Mr. Blenkinsop: asked the Minister of Labour whether he will give special consideration to claims for exemption from, or postponement of, National Service for those who, as in the case of Mr. Foden of Newcastle-upon-Tyne, about whom representations have been made, have served in the Merchant Navy and worked in the mines and who have strong compassionate grounds for taking other civilian work.

Mr. Iain Macleod: Men who leave employment, for which they have been granted indefinite deferment while still liable for National Service, as contemplated by Mr. Foden, must expect to be called up. They have however the right to apply for postponement of call-up on the grounds of exceptional hardship. Such applications are carefully considered by the statutory authorities appointed for the purpose.

Mr. Blenkinsop: Does not the Minister feel that this is rather a cat-and-mouse business? Will he not agree that it is very much more important at the present moment that this man should be able to take work of real importance outside the coal industry rather than to insist that he should either remain in the coal industry or go into the Forces?

Mr. Macleod: No. If I took it upon myself to decide in advance whether or not there was a case on compassionate grounds for this man, I, as Minister of Labour, would be taking the place of the statutory authorities appointed by this House. That would be quite wrong.

Hardship Cases

Mr. Frank Allaun: asked the Minister of Labour (1) if he will exempt from National Service the sons of widowed mothers living alone or with young children;
(2) If he will exempt from National Service men who are married with a young child or children.

Mr. Iain Macleod: I have no power to exempt men from their liability under the National Service Acts. Any man may apply for his call-up to be postponed on the grounds that it would cause exceptional hardship, and I can assure the hon. Member that such applications from men in the circumstances mentioned are very sympathetically considered.

Mr. Allaun: Is it not utterly wrong that application for postponement on hardship grounds are being turned down even though the widows are elderly, unwell and in a highly nervous state? Particularly in view of the increased numbers of recruits, will the Minister reconsider the question of exempting entirely these two categories?

Mr. Macleod: No. I have said I have no power to exempt them. If the hon. Member or any other hon. Member wishes to bring to my notice one or two individual cases, I shall consider them, but in fact the number of applications for deferment on hardship grounds has been going up steeply since I amended the Regulation a little time ago. I doubt if this is a very real problem. I think that in almost all these cases deferment has been granted.

Mr. Lee: Is it a fact that there is now a reservoir of people to be called up which is bigger than the requirements of the Forces? If that is so, will the Minister consider bringing before the House new categories which he will agree could be deferred?

Mr. Macleod: I doubt if in fact we are in that position. It is only a month ago that the Minister of Defence and I came to the conclusion that we could reasonably allow our last reserve, the fourth quarter of 1939, to be assured that they would not be called up. We have not sufficient numbers in hand to meet the suggestion made by the hon. Member.

Mr. Gower: Will my right hon. Friend pay particular attention to the position

of unemployed sea-going men because, in spite of the assurance he gave me some time ago, it seems that some of them are being made available for military service although they are ready to go to sea but cannot obtain ships?

Mr. Macleod: I think I had better refer the hon. Member to my supplementary answer. If he likes to bring a special case to my notice, I shall consider it.

Mr. Allaun: On a point of order. In view of the unsatisfactory nature of the reply, I beg to give notice that I shall raise this matter on the Adjournment.

Oral Answers to Questions — THE PRIME MINISTER AND LORD MONTGOMERY

Mr. Lipton: asked the Prime Minister whether he will make a statement on his official discussions with Lord Montgomery on Wednesday last.

The Secretary of State to the Home Department and Lord Privy Seal (Mr. R. A. Butler): I have been asked to reply.
The term "official discussions" is not applicable to the private talk which my right hon. Friend had with Lord Montgomery. On this I have no statement to make.

Mr. Lipton: Will the right hon. Gentleman please explain why a private, personal, unofficial visit by Lord Montgomery to Russia should require a forty-five minute conference at No.10 Downing Street with the Prime Minister and the Foreign Secretary? Who was advising whom? Is it not rather naïve to expect Mr. Khrushchev, Dr. Adenauer and General de Gaulle still to regard this visit as a completely private, independent visit?

Mr. Butler: No, Sir. Not when the full facts are known. [HON. MEMBERS: "When will that be?"] Field Marshal Montgomery mentioned to the Prime Minister his wish to go to Moscow, and my right hon. Friend the Prime Minister said that as a private person Lord Montgomery was entitled to go wherever he liked. Before going to Moscow, the Field Marshal had the courtesy to suggest that he might have a conversation with my right hon. Friend the Prime Minister, which he did, and the Prime


Minister was able to give him some very valuable advice upon his forthcoming visit to Moscow.

Mr. Bevan: Are we, therefore, to understand that the Prime Minister is convinced that Lord Montgomery is going to Russia as a private citizen, and is Lord Montgomery equally convinced?

Mr. Butler: I can only answer in this House for my right hon. Friend.

Mr. Nabarro: Has my right hon. Friend observed that Mr. Jimmy Edwards has gone to Moscow? Can my right hon. Friend say whether the Prime Minister had a private conversation to brief Mr. Jimmy Edwards before he departed?

Mr. Butler: I am not aware whether my right hon. Friend had a conversation with Mr. Jimmy Edwards or not. No doubt if Mr. Jimmy Edwards had sought advice we should have been glad to give it to him.

Mr. H. Morrison: In view of the very large and varied number of people who are going to Moscow with the hope of having conversations with Mr. Khrushchev, is not there a real danger that Mr. Khrushchev will get utterly confused?

Mr. Butler: From my personal acquaintanceship with Mr. Khrushchev, I think he is quite capable of looking after himself.

BUSINESS OF THE HOUSE

Proceedings of the Committee on Income Tax (Repayment of Post-War Credits) [Money] exempted, at this day's Sitting, from the provisions of Standing Order No. 1 (Sittings of the House)—[Mr. R. A. Butler]

Orders of the Day — WAYS AND MEANS [7th April]

Resolutions reported.

Resolutions read a Second time.

Question, That this House doth agree with the Committee in the said Resolution, put forthwith on each Resolution, pursuant to Standing Order No. 86 (Ways and Means Motions and Resolutions). and agreed to.

[For particulars of Resolutions, see OFFICIAL REPORT, 7th April, 1959; Vol. 603, c. 65–74.]

Orders of the Day — FINANCE (EXCHEQUER ADVANCES)

Resolution reported;
That, for the purposes of any Act of the present Session relating to Finance, it is expedient to authorise such increase in the sums which, under section forty-two of the Finance Act, 1956, are authorised or required to be issued out of the Consolidated Fund, raised by borrowing, or paid into the Exchequer, as may be attributable to any provision of the said Act of the present Session continuing the power to make advances under that section and increasing to sixteen hundred and twenty million pounds the aggregate amount of the advances that may be made thereunder.

Resolution agreed to.

Orders of the Day — FINANCE (IMPORT DUTY RÉLIEFS)

Resolution reported;
That for the purposes of any Act of the present Session relating to Finance it is expedient to authorise such increases in the sums which, under section five of the Import Duties Act, 1958—

(a) are payable out of moneys provided by Parliament on account of expenses of government departments; or
(b) are payable into the Exchequer on account of fees received by government departments;

as may result from extending the powers conferred by subsections (1) and (4) of that section so as to make provision for relieving from import duty herrings imported for conversion into fish meal and oil or bought for that purpose after importation.

Resolution agreed to.

Orders of the Day — WAYS AND MEANS [13th April]

Resolution reported;

AMENDMENT OF THE LAW

That it is expedient to amend the law with respect to the national debt and the public revenue and to make further provision in connection with finance, so, however, that this Resolution shall not extend to making amendments of the enactments relating to purchase tax so as to give relief from tax, other than amendments making the same provision for chargeable goods of whatever description and amendments reducing generally, for all goods to which it applies, any rate of tax which is not altered in pursuance of some other Resolution of the Committee of Ways and Means.

Resolution read a Second time.

Question, That this House doth agree with the Committee in the said Resolution, put forthwith, pursuant to Standing Order No. 86 (Ways and Means Motions and Resolutions), and agreed to.

Bill ordered to be brought in upon the, said Resolution and upon the other Resolutions reported from the Committee of Ways and Means and the Resolutions reported from the Committees on Finance (Exchequer Advances) and Finance (Import Duty Reliefs) and agreed to this day, by the Chairman of Ways and Means, the Chancellor of the Exchequer, Mr. Maudling, Mr. Simon, and Mr. Erroll.

Orders of the Day — FINANCE

Bill to grant certain duties, to alter other duties, and to amend the law relating to the National Debt and the Public Revenue, and to make further provision in connection with Finance, presented accordingly and read the First time to be read a Second time upon Monday next and to be printed [Bill 96].

Orders of the Day — INCOME TAX (REPAYMENT OF POST-WAR CREDITS) BILL

Order for Second Reading read.

3.36 p.m.

The Chancellor of the Exchequer (Mr. Derick Heathcoat Amory): I beg to move, That the Bill be now read a Second time.
This Bill carries into effect the proposals made in my Budget speech relating to Income Tax post-war credits. It is, I hope, a Bill which will command general approval on both sides of the

House. I would remind the House that the reason for dealing with this matter to a separate Bill, rather than in the Finance Bill, is to enable us to start making payments as early as possible. I shall deal with the history only very briefly.
Hon. Members will remember that these credits were introduced in 1941. They represented the extra tax payable by reason of a reduction in the earned income allowance and in the personal allowances made in that year's Budget. The intention was that they should be repaid, in the words of the 1941 Finance Act,
…so soon as may be after the termination of hostilities".
Since then two steps towards repayment have been taken in the years since the war. The first was taken by the right hon. Gentleman the Member for Bishop Auckland (Mr. Dalton), when he made provision in the Finance Acts, 1946 and 1947, for the credits to be claimed by men when they reached the age of 65 and women when they reached the age of 60. In 1954, my right hon. Friend the Lord Privy Seal provided for the repayment of the credits which had belonged to a deceased person on the date when their holder would have reached the qualifying age had he lived.
The total amount of the credits originally created is estimated at about £765 million. Of this amount, £25 million was set off against tax arrears in 1946 and £310 million has been repaid, so the amount still outstanding is about £430 million. The present rate of repayment is about £18 million a year and if nothing further were done it would be very many years before the credits were completely repaid. The reason which has hitherto led successive Chancellors of the Exchequer of both parties to take the view that faster releases were impracticable was, in brief, the prevalence of inflation. A situation in which, about fourteen years after the end of the war, more than half the total amount of credits originally created is still outstanding is, however, one about which none of us, I think, can feel at ease.
The delay in repaying what is naturally. and, I think, rightly, thought of as the credit-holder's own money is particularly deplored by all of us in cases where the credit-holder is suffering hardship, and there has developed a feeling on both


sides of the House that something should be done to meet this position.
I am glad, therefore, that this year the financial and economic situation makes it possible to launch a comprehensive attack on this front. Indeed, we are fortunate that not only is it now possible for me to speed up this payment, but it fits into the pattern of a limited encouragement to the expansion of the economy to do so. The sooner these credits can be finally disposed of the better we shall all be pleased, but, clearly, the rate at which this can happen must depend on the state of the general economy as it develops in the future.
The Bill takes general power to prescribe qualifications for repayments by regulation. This power will provide a useful weapon in our general armoury for counteracting the tendencies in the economy to swing between the extremes of boom and slump. As I explained in my Budget speech, I propose to accelerate repayment in three ways. In the first place, I propose to reduce by two years the ages at which credits can be claimed. This will mean that the qualifying ages w II become 63 for men and 58 for women. That will cost about £35 million in the current year. I should, of course, have been delighted if I had felt able to pay for even more than that now, but the sum which I have mentioned is very substantial and I felt that I could not go further than that at present.
Secondly, I propose that the credits in all cases shall be repayable on the death of the holder. This will secure repayment for a large class whose claims many hon. Members have pressed on grounds of hardship, namely, widows who have inherited their deceased husbands' post-war credits. The cost of that proposal will be £34 million for the current year.
Thirdly, I propose that repayment should be made to certain clearly defined hardship cases. The idea of dealing specially with hardship cases has been canvassed from the very outset of the scheme, but has hitherto always been rejected for quite serious reasons. There is, first, the problem of definition. We must find an objective definition of hardship, which, I think, inevitably has to be a definition which is already applied in other directions, since the Inland Revenue is itself neither fitted nor staffed to test the

qualifications of applicants on the grounds of hardship.
There is, secondly, the problem of equity. Whatever definition of hardship is chosen, there will always be some persons who fall just outside it and who may be suffering more hardship than some of those who qualify. It is not an easy matter to administer a scheme which, by its nature, must be discriminatory between people who are all sufferers in one way or another from misfortune.
After much thought, however, I have come to the conclusion—and I think that the whole House will agree with me—that it is right to make a start in this difficult business even though the scheme which I am proposing is bound to involve discrimination of the kind which I have mentioned. I have selected three categories of hardship which are capable of precise and objective definition and each of which, I feel sure, will be generally accepted as meriting special treatment.
I should perhaps again remind the House of the classes which will qualify under these proposals. The first class is persons who, for a continuous period of 12 weeks ending after 7th April, have been receiving National Assistance. The second class is persons who, after 7th April, are named in a register of blind persons required under Statute to be kept by a local authority. This will not include persons who are partially blind. The third class is persons who, after 7th April, are receiving constant attendance allowance or unemployability supplement under the war pensions Instruments, the Industrial Injuries Acts or the Industrial Diseases (Benefits) Acts, or who would have been in receipt of unemployability supplement if they had not claimed an alternative benefit instead, or who would have been in receipt of constant attendance allowance but for being a hospital in-patient.
Hon. Members will see that in all these cases the Inland Revenue will be able to obtain a certificate from the responsible authority—the National Assistance Board or the Ministry of Pensions and National Insurance, or whoever it may be—that the claimant satisfies the conditions laid down. The cost of repayment to claimants in these classes will be about £2 million this year.
The provisions to authorise the payments which I have just described are to


be found in Clause 1. The Bill gives the Treasury power to make regulations prescribing the classes to be paid. The original legislation introducing the postwar credits did not permit the Treasury to discriminate between classes of claimants in making repayments and provision therefore had to be made in the Finance Acts for the repayments which have so far been possible and have been made. Under the Bill the classes qualifying for repayment can be extended at short notice whenever the Government decide that an extension is possible and desirable. The regulations will be laid before the House and can be prayed against under the negative Resolution procedure.
I should perhaps explain at this stage the nature of the arrangements which have been made for making repayments to these classes. Very large numbers of claim forms have to be printed and distributed to many thousands of post offices throughout the country. These forms are at present being printed, and applicants will be able to obtain them from post offices on Monday, 4th May. Claims can then be made to the Inland Revenue from then on. Although no doubt the Bill will not have become law by then, Clause 1 (4) will validate all such claims.
Regulations will be made immediately the Bill has become law and, if the timetable at which I am aiming has been maintained, I hope that they will authorise payment from 1st June. Hon. Members will forgive me if I repeat something which I mentioned in my Budget speech. I hope that they will understand if, in these circumstances, I ask them not to press for any immediate extension or alteration of the classes who are to receive payment.
Had we waited until the Bill had become law before getting on with the drafting and printing of these forms, the whole programme would have been delayed and many people would have had to wait weeks or perhaps months longer for their money. Nor could we at this stage make changes in the plan without involving a good deal of serious delay in starting payments. I can, however, give an assurance that I will certainly consider any suggestions which are put forward either n the course of the de-

bate on the Bill or elsewhere for future action further ahead.
As I have already explained, the form in which the Bill is drawn makes it possible for further classes to be added by regulation if this is shown to be possible and desirable. It would, however, not be practicable to make any additions to the qualifying classes until after the mass of the new claims under these proposals have been dealt with.

Mrs. Jean Mann: How many persons are likely to be affected by these proposals?

Mr. Amory: I estimate that perhaps as many as 1,400,000 people may become entitled to claim under these proposals. That will be in addition to approximately 300,000 claimants who will be covered by the normal one year's payment which would be made apart from these proposals. That is a total of 1,700,000.

Dr. Horace King: Will the Chancellor make it clear that the post-war credits due to the widows of holders who died previous to the passing of the Bill will come automatically into the provisions of the Bill?

Mr. Amory: The widow of someone who died previous to the passing of the Bill will, under these proposals, become entitled straight away to the post-war credits belonging to her late husband.

Mr. George Chetwynd: They will have to apply on the forms that are being issued?

Mr. Amory: They will have to apply on the forms which are being issued, but a widow would not become automatically entitled to her own post-war credit if she had one.

Mrs. E. M. Braddock: Does that include not only the widow, but the next-of-kin?

Mr. Amory: Yes. All that includes whoever is the beneficial owner of the credits under the dispositions of the deceased.
This will entail a tremendous amount of work and a good deal of overtime in Inland Revenue offices and it is as much as they can be reasonably expected to cope with at present. I think that it will be three or four months before they


have broken the back of the new job, and I am sure that it will be understood generally that they cannot pay off everyone at once and will only be hindered if claimants write to them pressing for prior attention. We should get into a muddle if that happened.
This might be a convenient moment to refer to one or two alternative suggestions which have been made to me for repayment of post-war credits. Broadly, these fall into two main categories. First, there have been various proposals for repaying a part of every credit. The objections to those suggestions are almost entirely administrative. It will be a large enough operation to deal with the 1,400,000 claims I have mentioned which we expect this year in addition to the normal 300,000, but a repayment of part of every credit would involve checking claims from everyone who holds any credit, and there are well over 11 million holders. We should have to repeat this enormous operation as each successive slice of the credits became due for repayment.
That objection applies to the suggestion made by the right hon. Member for Bishop Auckland that repayments should be made one year at a time, that is to say, taking 1941 credits first, then 1942 credits, then 1943 credits, then 1944 credits, and so on. The Inland Revenue simply could not undertake that task with their existing staff, or anything approaching their existing staff.
Secondly, there have been suggestions which, in different ways, mean converting post-war credits into some ordinary form of savings security— by turning them, for instance, into Post Office Savings Bank deposits, or Premium Savings Bonds, or making them a type of marketable security. I have examined a number of ideas of that kind, but have found none which did not involve inflationary effects comparable to those which would result from complete repayment. The impossibility of dealing with all the claims within a reasonably short period, even a year or two, would also apply.
I will not examine those proposals in any further detail at this stage, but I am sure that when my hon. and learned Friend the Financial Secretary winds up the debate he will deal with any questions which may have been raised in the course of the debate about alternative methods which could have been adopted.
These proposals for accelerating repayment mark the first stage in a determined attack upon the post-war credit problem, but they will still leave a great deal to be done. Even after this operation and the normal annual repayment, during which about £89 million in all will be repaid this year, there will be about £340 million outstanding.
I thought it right that those who are not receiving repayment at once—by " at once " I mean in the next few months—should receive interest on their credits when they qualify. This interest will not be paid year by year, but will be added to the sum of the credits when payment is made. The interest will be at the same rate as on Post Office Savings Bank deposits, namely, 24 per cent., and will be compounded with what is called yearly rests.

Mr. Gordon Walker: What does that mean?

Mr. Amory: I believe that "yearly rests "means that interest is not paid on the interest accruing during the year. If that is not so, I will find out and inform the right hon. Member.

Mr. Cyril Osborne: What is the estimated total of the interest which will be added to the capital which has to be repaid?

Mr. Amory: I cannot say that, because it depends how quickly the remaining post-war credits are paid off over the years. The estimate is that it will amount to practically nothing in the first year or two. If post-war credits have not been paid off by 1980—I hope that they will have been—by that time it will have amounted to about £7 million a year. I hope that post-war credits will have been disposed of before then. That £ 7 million a year is the annual rate, not the total. I am unable to give my hon. Friend the Member for Louth (Mr. Osborne) the total figure, because it will depend on the period.

Mr. Osborne: If total repayment is not completed until 1980, there are twenty years to go. Twenty times £ 7 million make £ 140 million.

Mr. Amory: No. My hon. Friend has got it wrong. They will be very small sums indeed in the early years, but they will increase. It is impossible to state what the total amount will be until one


knows how large the annual repayments will be each year. It will not amount to any such sum as my hon. Friend has mentioned, I hope.
The interest will not be liable to either Income Tax or Surtax. Credit holders will, therefore, be in much the same position, rather better actually, as if they had been able to claim now and had put the proceeds in their Post Office Savings Bank accounts and had allowed them to accumulate there. Clause 2, therefore, provides that interest shall be payable as from the beginning of October next.
The Bill deals also, in Clause 3, with the special position of building societies. This is rather complicated. There is a long-standing arrangement under which building societies are taxed on so much of their profits as goes to pay interest on shares and deposits, not at the full standard rate of tax, like other incorporated bodies, but at a composite rate.
This composite rate represents an estimate of the average rate at which the shareholders and depositors would be liable to tax on their interest if their personal circumstances were taken into account. The reduced allowances were taken into account in fixing the composite rate in the war years. But to put building societies into the same position as individual taxpayers the Inland Revenue worked out what the composite rate would have been if those reductions in the allowances had not been put into effect.
One of my predecessors, Sir Kingsley Wood, gave an undertaking hat tax at the difference between the two composite rates on the appropriate amount would be regarded as post-war credit due to each society which was a party to the composite rate arrangements. The time has come when it is proper to give statutory sanction to that undertaking so that building societies will have a legal right to their credits. I cannot undertake at present actually to repay building societies any of these credits, but power is taken under the Bill to provide by regulations for repayment in the future. When they receive repayment, the building societies will get interest on the same basis as individuals.
There is one other point which I ought to mention. When the certificates were first issued to individual taxpayers, they

were often sent out before the full demand for tax for that year had been paid, so that the taxpayers could have some concrete evidence of what they would ultimately be entitled to receive. The amount shown necessarily recorded the credit which would be due if the full tax due from the taxpayer were paid. In the great majority of cases, of course, the full tax has been paid and no difficulty arises, but in a very small minority it will have happened, for some reason or other, that the whole of the tax for that year will not have been paid.
In those cases it sometimes happens, therefore, that the full amount shown on the post-war credit certificate turns out not to be due. I realise that that occasionally causes disappointments and I have had Questions about that. But. clearly, the State cannot be expected to repay money which it has never received.

Mr. J. T. Price: Like other hon. Members, I have had problems of this kind put to me by constituents who have waited for many years to qualify and who have then found that an adjustment has been made by withholding or withdrawal of certain debits for the year in which the credit arose. I had hoped that in bringing forward this legislation we could have had a firm undertaking that evidence would be available as to the tax situation in that year. That is especially important with working-class taxpayers subject to P.A.Y.E. who rarely have documentary evidence of their tax position and of drawbacks going back twenty years. It is a serious source of annoyance to those people who have brought these cases to my attention.

Mr. Amory: I know, and I well remember the hon. Member raising these Questions with me. I have sympathy with that view and I have considered whether we could check the whole of the outstanding post-war credits so that people could know the position. However, for the administrative reasons which I have mentioned, that is not possible. If someone asks that it should be checked, that can be done. I agree about the problem, but I cannot see a solution. Perhaps it is something which we can discuss later.
To sum up the main object of the Bill, it provides a means of enabling me to carry out my immediate proposals for


accelerated payments, but it goes beyond that. It also provides machinery, as 1 mentioned in my Budget speech, under which extensions of the classes can be made quickly and easily as soon as ever it proves economically and financially possible to do so.

Mr. Osborne: My right hon. Friend said that £89 million would be paid off this year. but that there would still remain £340 million to be paid off. He then expressed the hope that all would be paid by 1980. Is it not fair to assume that conditions in the next four years will be as good as those of this year? If £89 million is paid off each year, the whole lot will be paid off in four years.

Mr. Amory: I leave my hon. Friend to make his own calculations. I cannot commit myself to anything more than that to which I am already committed. I should be very disappointed if the conditions in the country were to remain such that it would be impossible to complete repayment before 1980.

Mr. Harold Wilson: Is not this one of the reflationary devices of the Budget, due to the fact that more slack in the economy has developed than the Government forecast a year ago, as shown by the Minister of Labour's own estimates of unemployment a year ago? If the hon. Member for Louth (Mr. Osborne) is right, would it not mean, on the Government's own assumptions, that the Chancellor would have to assume a continuing level of unemployment, more than he would want to foresee?

Mr. Amory: I am neither supporting nor rejecting my hon. Friend's calculations. I repeat what I said earlier. The impediment to faster repayment of these credits in the past has been the problem of inflation. If we can keep the economy free of inflation, as we must, then I hope that at any rate considerably faster progress with the repayment of post-war credits will be possible in the years ahead than has been possible in the years since the war.
As I said, the Bill provides machinery under which further extensions of classes can be made quickly and easily as soon as ever it proves economically and financially possible to do so. I hope that the payment of interest would also help those who are not being repaid this year to await their turn with greater patience.

Mr. Raymond Gower: Earlier in his speech, my right hon. Friend made a brief reference to suggestions about transferability. Is it not possible in a modified form to institute the right to transfer these credits, which would impose no obligation on the Treasury to bring forward an earlier date of payment? In other words, a person holding £100 worth of credits might well prefer to negotiate that for an immediate payment of £80 or £90, rather than wait several years before receiving £100.

Mr. Amory: That is a matter which I hope we shall pursue and discuss later, but the difficulties which stand in the way of that suggestion are administrative. It would be very difficult to launch a scheme of that kind section by section and it is administratively impossible to check on £11 million worth of post-war credits over a short period.
A second reason is that almost any scheme of that kind, for transferability. would raise the problem of inflationary effects if it were to apply to all outstanding credits. I shall listen with interest to anything my hon. Friend says on this subject and my hon. and learned Friend the Financial Secretary will answer any questions which arise. I see the advantage of that kind of solution, but nothing that I am proposing stands in the way of such a step if it later becomes feasible.
I commend the Bill to the House as a serious and practical attempt to grapple with a problem which has been causing all of us increasing anxiety as the years have passed.

4.10 p.m.

Mr. Gordon Walker: It is a pleasure to debate with the Chancellor in the relative calm between two storms—the acerbities of the Budget debate which we have just finished and the relentless fight on old-age pensions which we are about to begin.
The Chancellor has explained that this is a separate Bill which he mentioned in his Budget speech, hut, of course, he is also arguing that he did not mention the old-age pensioners in his Budget statement because that would need a separate Bill. I really cannot follow the logic of that. If it was wrong to mention old- age pensioners because that would need a separate Bill, then it was wrong to


mention post-war credits, because this, too, needs a separate Bill; but that was the argument which the Chancellor used. I will not pursue this, but it just shows the hollow arguments to which the Chancellor has been driven by his conscience on this matter of pensions.
We do not oppose this Bill; indeed, we welcome it. One question that we will have to consider is whether more can be done, and we will approach this aspect of the problem with great responsibility. We must also question whether more should not have been done earlier. The state of post-war credits is really a scandal. It is almost a public default that so much is outstanding, and will be outstanding even after this Bill is passed —about £340 million.
It is true that the circumstances which Lord Keynes foresaw when the country would need some injection of purchasing power did not arise until they were, in part, artificially induced by the policy of the present Government, but, undoubtedly, more could have been done to repay post-war credits if the Chancellor had decided to expand last year, instead of postponing expansion until this year, because he could have done last year what he has said in very similar circumstances it is right to do this year.
We would certainly prefer the proposal put forward by my right hon. Friend the Leader of the Opposition, that each year the age for repayment should be lowered by one year. If that had been done when my right hon. Friend suggested it, it would have had the advantage that we would now be four years on in the processing. There is the further advantage that we would have embarked upon a steady and automatic system of repayment which certainly could be speeded up at any time, if need be, and which would have given everybody in the country the knowledge of a minimum entitlement of which they could take note in making their future plans.
There is a great deal to be said for a steady and automatic rate and system of repayment which could be set at a safe level and which could be speeded up at any time by the machinery which we are now enacting. I should like to take up a point made in an intervention by my hon. Friend the Member for Westhoughton (Mr. J. T. Price). The Chancellor has said that there may be draw-

backs, in effect, if the tax in a particular year was not paid, so that the holder would get less than the original credit stated.

Mr. Amory: I think that I actually said, if the amount of tax assessed in a particular year had not, in fact, been paid by the taxpayer.

Mr. Gordon Walker: In other words. for that reason, the holder of the credit would receive less than the amount he was expecting to receive, which is on the face of the credit document. There would be a drawback. There is something in the point that the Chancellor made that the State cannot be expected to repay what it has never received, but there is also an argument that the State should be expected to pay what is implied on the face of a document which it has itself issued.
There is something to be said for this argument, too, and I suggest that the right hon. Gentleman should not take that argument too far, because the State does repay a great deal of tax which it has never received to dividend strippers in between the times when we block up the loopholes. [Interruption.] certainly, that is the whole essence of dividend stripping, that one claims and gets from the State tax which the State has never received. Therefore, I say that the Chancellor should not press that argument too far.
We are glad that the Chancellor is to pay interest at the present Post Office Savings Bank rate on the credits still outstanding, but I deeply regret that he said that this is not to be grossed up -in Surtax. The Chancellor dealt with this matter extremely cavalierly. It certainly should be grossed up for Surtax, because it would not affect most people. Most people have only small amounts to come back, as they are not large taxpayers, but there will be some very rich people who get very large interest on the post-war credits paid back to them, and surely enough has been done already in this Budget for very rich people.
The Chancellor said that people would get interest on the outstanding post-war credits as if, I think he said, they had merely allowed the money to remain in the Post Office Savings Bank and accumulate, but that is not true. If one leaves money in the Post Office Savings Bank, one gets the first £15 of interest


Income Tax free, and it is then grossed up for Surtax, so that what the Chancellor said is not true.

Mr. Amory: What the right hon. Gentleman says is true for the Surtax payer. That is why I said "at least as well off."

Mr. Gordon Walker: The right hon. Gentleman may well have put in a qualification, but he rather swallowed it up in the delivery of his words. I do not want to play up that particular sentence, but to get to the real principle involved here, because it is a principle which was clearly, if somewhat flamboyantly, stated by the present Prime Minister when he was Chancellor of the Exchequer. I hope that the right hon. Gentleman will very carefully consider this principle as it was laid down by his right hon. Friend when he was his predecessor at the Treasury.

Mr. Gower: Does not the right hon. Gentleman think that, as the State has kept these sums of money so long and deprived people of them, it would be pettifogging that any more tax should be paid on them?

Mr. Gordon Walker: I hope that the hon. Member will suspend judgment until he has heard what his right hon. Friend the Prime Minister said on this very matter. Charges of this kind were made against him from his own side, with references to pettifogging small amounts, but the same principle is involved here. On 17th April, 1956, the Chancellor of the Exchequer, now the Prime Minister, flatly said:
… this interest, grossed up by reference to Income Tax at the standard rate, will be chargeable to Surtax."—[OFFICIAL REPORT, 17th April, 1956; Vol. 551, c. 877.]
After that, many of the right hon. Gentleman's supporters, as the hon. Member for Barry has been saying, attacked it as being pettifogging and one thing and another.
During the Committee stage of the Finance Bill, the present Prime Minister, then the Chancellor of the Exchequer, stated the principle, which is a very important principle, in very clear terms. First. he dismissed the argument that only relatively small sums would be involved. I hope that we shall not have that argument put up, because the Prime Minister completely rejected the validity of the

amount involved when dealing with a matter of important principle like this. What he said was:
We have not extended this concession"—
and he used the word " concession ", which we have been upbraided for using, and went on—
to cover Surtax. I will be frank about it. It is really very simple. It is not because I think there would be queues of excited tycoons standing outside the post offices wishing to invest, say, £300 to save £2 10s. or so a year on their Surtaxable income.
He said that it would be a matter of the principle involved, and he did not think that people would make a rush to get the benefits.
The right hon. Gentleman went on to state in clear terms a principle which is just as valid in 1959 as it was in 1956:
It is because this proposal conforms to the principle which has been followed in the past, which I think it is right to follow now.
The Chancellor has come, for some reason or other, to a decision that a principle which it was right to follow in 1956 it is wrong to follow in 1959, but the Prime Minister went on, in the speech from which 1 have quoted, to illustrate this principle. He said:
Let us take the mathematical computation. Everyone will receive Income Tax exemption on £15. The £15 will not be taken into account at all in computing Income Tax liability. Supposing, for the mathematical point, that a man paid tax at 8s. 6d., the 2½ per cent, tax free would mean a 4½ per cent. return, subject to tax. But if we were to make the Surtax concession, then for a payer at the top rate, to illustrate the argument, the 2½ per cent. tax free would be equal to 33½ per cent. gross return, and I should have difficulty in granting a tax exemption on that scale."—[OFFICIAL REPORT, 7th June, 1956; Vol. 553, c. 1441.]
I hope that the present Chancellor will find some difficulty in granting a tax exemption on that scale.

Mr. Gower: Does the right hon. Gentleman make no distinction between money freely invested by people of their own volition and money withheld rather reprehensibly— as he said in his opening remarks—by successive Governments?

Mr. Gordon Walker: I believe that it was somewhat reprehensible to withhold it, but I do not think that we should give Surtax payers 30 per cent. interest when we are not able to do the same for people further down the scale.
I hope that the Financial Secretary, who is very courteous and resourceful, will give us some figures corresponding to those given by the Prime Minister in 1956, at the prevailing standard rate of tax after the Budget proposals, and at the top Surtax rate. We want to know what the gross return to payers at the top rate would be if the 2½ per cent. interest on these post-war credits was not grossed up for Surtax. In other words, what is the gross return corresponding to the 33½ per cent. which the Prime Minister—then the Chancellor—said would have been the consequence of not grossing it up for Surtax.

Mr. John Arbuthnot: Will the right hon. Gentleman bear in mind the depreciation which has taken place in the value of the £ during the last thirteen years, during which successive Governments have held these post-war credits in their maws?

Mr. Gordon Walker: That consideration applies to people getting 2½ per cent. tax free just as much as to those getting 33½ per cent. tax free. That is no argument for giving a 33½ per cent. tax rebate to certain rich people, who have already been sufficiently benefited this year. They have had enough, and they should not be greedy and try to get these extra and very unjust special allowances.
The Chancellor talked about the 2½ per cent. interest and rejected the idea that, now that we are paying upon these post-war credits the same rate as the Post Office Savings Bank is paying, it strengthens the argument for creating deposits from these credits in the Post Office Savings Bank until we can speed up repayment. If we created deposits in the Post Office Savings Bank instead of paying in cash, more would be saved. People would get their credits in their Post Office Savings Book and not by way of a cheque which they could cash. It would then be safer to pay out more.
Now that the Chancellor is paying the same rate as is paid by the Post Office Savings Bank only a simple transaction is necessary. Moreover, this was the original intention. I have been looking up the speech made by Sir Kingsley Wood on 7th April, 1941, when he said that the extra tax to he paid by any individual due to the decrease in personal allowances would be

offset after the war by a credit which will then be given in his favour in the Post Office Savings Bank."—[OFFICIAL REPORT, 7th April, 1941; Vol. 370, c. 1329.]
That was the pledge given by the Government in 1941, and although such pledges are not absolutely binding there is much to be said for trying to carry out a pledge given in clear terms by a previous Government, and I should have thought that this was a sensible and reasonable thing to do. It would enable us to make a rather faster rate of repayment without a corresponding risk of inflation.
We are very glad to have been told that any post-war credits rebate will be disregarded for the purpose of National Assistance, and we are grateful to the right hon. Gentleman for his courageous decision about hardship cases. We realise that it is difficult for a Chancellor to make such a decision, because there is great official pressure upon him, and powerful arguments are put forward about the difficulty of drawing lines. We are grateful to him for his personal resolution in standing up to the sort of pressure that must inevitably have come upon him.
We will scrutinise carefully his proposals with regard to hardship cases and we shall have some suggestions to make. But we realise that we have to draw lines if this sort of proposal is to be carried out at all, but we shall not seek to embarrass him by improper attempts to extend those lines. He said that this was making a start, and we shall make suggestions only of serious weight. We shall not take advantage of his proposals; otherwise no Chancellor will ever take any steps to deal with hardship cases.
It has been drawn to my attention that cases of grave hardship are involved among those who are in receipt of sickness benefit, but who occasionally are able to do short periods of work. They slightly recover, and work for a month or six weeks, and then have to stop and once again apply for sickness benefit. It may not be possible to classify these cases very clearly, but great hardship is undoubtedly involved, and we ought to try to find some way to certify these people. This will have to be a decision external to the Inland Revenue, but if the right hon. Gentleman could find some way of doing it and of meeting the other points which my hon. Friends will suggest, we should be grateful.
There is one feature of the Bill which I do not like. Under it we are to have the power to pay out large sums of money by way of regulations. This means that the financial control exercised by the House is slipping away. The Government can already make alterations in the Purchase Tax by executive action, and now, under the terms of the Bill, they will be able to pay out large sums of income in post-war credits, in effect, by orders and regulations. If this process continues, and if the Conservatives ever win another election, we shall be able to have a post-election Budget without the Government needing to come to the House of Commons. That is going a little too far.
At any rate, there should be an affirmative Resolution. It is disrespectful to the House that the Government should be able to make large payments subject only to annulment on a Prayer. There is a distinction between regulations needed to extend our power to deal with cases of hardship which would not involve vast sums of money and would be useful and important from the human point of view, if implemented quickly—and regulations providing for the payment of large sums of money, which we believe should be done by way of affirmative Resolution.
I am also doubtful whether this payment should be financed by below-the line borrowing. That does not apply to the interest, but the repayment of postwar credits will be carried out by borrowing below the line. This is not a real capital payment; no capital asset is being created in return for the money borrowed. Some will be saved—I hope that a good deal will be saved—but a good deal of Income Tax remission is also saved, and that fact is not used as an argument for financing Income Tax reliefs by below the-line borrowing.
We cannot argue that because some post-war credits will be saved they are a form of capital and it is, therefore, right to pay for them by borrowing. It would be more honest for the Government to have made this an above-the-line item of Government expenditure, to be met by taxes. It would not have made any difference to the balance, but it would have made the above-the-line figures much more honest. The surplus would have been £233 million instead of £364 million.
We are not opposing the Bill, although I would have preferred a system of automatic regular repayment which would Rive an immediate right, to which everybody entitled to post-war credits could count upon, and which could be speeded up if necessary by regulations or, as I would prefer, by brief Bills. That is the right way to deal with the payment of large sums of money. The House would always facilitate the passage of such Bills, as it will facilitate the passage of this one.

4.30 p.m.

Mr. John Arbuthnot: May I begin by dealing with one or two points raised by the right hon. Gentleman the Member for Smethwick (Mr. Gordon Walker). He said that the Chancellor should have tackled the problem of repaying post-war credits by speeding up by one year, each year, the amount repaid. The difficulty about doing that is that it would not give my right hon. Friend the manœuvrability to inject further purchasing power into the economy at a specific time.

Mr. Gordon Walker: It could he speeded up.

Mr. Arbuthnot: Speeding up might give a definite increased rate of injection which would be permanent while postwar credits remained and might produce more purchasing power at a time that would he embarrassing to my right hon. Friend.

Mr. H. Wilson: Does the hon. Member realise that one reason why the Chancellor cannot go further this year than he might want to is the administrative difficulty of injecting a greater number of years of repayment? If the Chancellor proceeded on the lines suggested by my right hon. Friend, he could have doubled the basis on which he proceeded this year.

Mr. Arbuthnot: It was not a speedup in any single year that the right hon. Gentleman the Member for Smethwick wanted. He was suggesting an automatic rate of speed-up year by year.

Mr. Gordon Walker: I said that it could be supplemented by a method of speeding up in any way that was proper.

Mr. Arbuthnot: That is an acceleration on an acceleration.

Mr. Gordon Walker: Why not?

Mr. Arbuthnot: It may be that that amount of money being pumped into the economy would prove embarrassing and create inflation.
I was distressed to hear the right hon. Gentleman suggesting that it was wicked and anti-social to he a Surtax payer. The more Surtax payers we have in the country, and the more people we can encourage to create the productive capacity that makes them Surtax payers, the better it will be for all sections of the community. This attack on Surtax payers, as if they were evil, is completely unwarranted.

Mr. J. T. Price: Surely it is not being suggested that all people who are fortunate enough to pay Surtax are the only ones who make any contribution to the productive capacity of this country. I thought that a lot of them were " spivs " who did not do any useful work to the contribution of the economy, and I think that I can prove that.

Mr. Arbuthnot: I cannot enlarge upon the hon. Members' acquaintance with "spivs ". What I was suggesting was that Surtax payers were people who ought to be encouraged, and not discouraged.
I agree with the right hon. Gentleman when he said that more would be saved out of the money that the Chancellor intends to remit this year, and in future years, if it was paid out not in cash but in Post Office Savings Bank accounts or some other form of security. I hope that it will not add too much to the administrative difficulties if my right hon. Friend the Chancellor of the Exchequer finds it possible to do something like that.
This is a very happy occasion. It is an occasion when the Government and their predecessors, after a long period of being unable to do anything about postwar credits, have found that they can do something fairly substantial towards meeting the obligations which were incurred more than thirteen years ago. During that period £430 million worth of post-war credits has been outstanding. It is not only the fact that that sum has been outstanding for so long, but that it has been outstanding during a period of inflation when the value of the money contributed by people—admittedly, compulsorily—has been steadily depreciating in purchasing power.
None of the suggestions that I am about to make must be allowed to detract at all from the sincere congratulations from all sides of the House to my right hon. Friend for the courageous way in which he has tackled the problem now. The reduction by two years in the qualifying age from 60 to 58, and the remission to widows on the death of a holder, will be immensely valuable. I am particularly glad that my right hon. Friend has overcome the administrative difficulties that were no doubt presented to him when he put forward the idea that those in receipt of constant attendance allowance and unemployability supplement should receive special treatment. All of us find when we have consultation periods or "surgeries ", or whatever one calls them, that there are cases of hardship in which, from the point of view of human values, one wants to do something to help if it is possible.
My right hon. Friend has taken two particularly deserving sections of the community to whom to give special help. We are also glad that my right hon. Friend has taken the power in the Bill to extend at short notice the rate of repayment whenever the Government feel that it is possible to do so without damage to the economy.
My right hon. Friend was good enough to give me an opening, if I may put it that way, when he said he would welcome any suggestions for future action. From time to time in the past I have urged not only on him but upon his predecessors that the problem of post-war credits might be solved by stamping the post-war credit with the date at which the present holder of it reaches the age when it would be repayable and then make that post-war credit a negotiable instrument repayable on that date. This plea has been resisted consistently on the ground that if somebody aged, say, 45, whose post-war credit would not become payable until he reached the age of 65, wanted to sell his post-war credit, it would have to be sold at a substantial discount and this would give the impression that the Government were trying to penalise the holder of such a credit and run away from their responsibility.
Now that my right hon. Friend is prepared to give interest at 2½ per cent. tax free on post-war credits, the figure of discount would not be so great, if there


were a discount at all. I hope that my right hon. Friend will bear in mind that that might be a possible way of helping to reduce the burden on people who are suffering particular hardship and need their post-war credits but do not come within the categories he has defined.
Another idea that I feel is attractive is this. There is £430 million outstanding in post-war credits. This year the Chancellor is prepared to do without revenue on this account of £89 million. The maximum that anybody can hold in Premium Savings Bonds at the present time is £500. The maximum number of post-war credits in the hands of any individual is about £300. If the ceiling of Premium Bonds were raised from £500 to £800 and all post-war credits were transferred into Premium Bonds the sum of money that the Chancellor would be likely to have to find would not have been any more than the £89 million which he is prepared to do without this year. In that way, the post-war credits problem could have been solved in one fell swoop.
My right hon. Friend scouted that idea, because he said that to put post-war credits into Premium Bonds or into the Post Office Savings Bank involved inflationary effects similar to those that would flow from complete conversion. That is an argument which I find difficult to follow. As I see the matter. the man who now holds post-war credits has those credits frozen in his hands. If he sells them, somebody buys them. Just as the money becomes free to him, so the same amount of money becomes frozen in the hands of whoever eventually buys it. I should like my hon. and learned Friend the Financial Secretary, when he replies, to give the reasons why it is believed that when money is frozen in one person's hands and freed in somebody else's hands, that should of itself be as inflationary as if the post-war credits were repaid in full in cash right away. That is a matter which I do not understand and I do not believe that that would be the effect of it.
Having made those suggestions, I should like once again to say to my right hon. Friend the Chancellor and to all those who have been working on this problem with him in the Treasury how much we, on all sides, welcome what he has done and how much we thank him for it. More power to his elbow in the further steps that he proposes to take. I

hope that he will be able to take them rapidly.

4.43 p.m.

Mr. Glenvil Hall: I am one of the dwindling band of Members of the House who heard Sir Kingsley Wood make his Budget speech on 7th April, 1941. It is interesting, in a minor way, to note that he made his pronouncement about post-war credits on the same day, although, of course, in a different year, as the present Chancellor of the Exchequer made his Budget statement last week.
I always thought—I thought at the time and experience has confirmed my view—that it was a great mistake on the part of the former Chancellor to suggest post-war credits. At that time, the whole nation, practically without exception, was willing to bear extra taxation if it would further the war and bring us eventual victory. Sir Kingsley Wood did it, I am sure—indeed, he said so—with the best intentions in the world, namely, that remembering the immediate years after 1914–18 it might be that a certain amount of unemployment and dislocation would follow the war and post-war credits would, therefore, come in very handy to the great mass of the people immediately the war ended. As we know, the electorate had a good deal more sense than to return the Conservatives in 1945 and we had a Labour Government coming into power, the result being that the conditions which some people feared did not occur.
From what I have heard, and even heard today in this debate so far as it has gone, except for the speech of the Chancellor of the Exchequer, we do not seem to realise the difficulties which face the Treasury in attempting to pay out these sums. It must be remembered, first, that these post-war credits accrued during war years, when the population was largely on the move. I should imagine that quite a considerable number of the 11 million people who still, after this year's payments are made, have the expectation of payment to come, will to a substantial extent, have had dealings with more than one Inland Revenue Inspector. That being so, the certificates which they hold are not all on the records of one tax office. It is a considerable job for the Inland Revenue, in addition to its other work, to sort out and calculate


the amounts which are due to people who still have these post-war credits to come. This should be remembered when we make suggestions, very properly, to the Chancellor of the Exchequer.
I was also a Member of the House in 1946, when the first tentative efforts were made to start repayment of these credits. The then Chancellor of the Exchequer, my right hon. Friend the Member for Bishop Auckland (Mr. Dalton), decided to make payment to men at 65 and women at 60 years of age. There is a letter in The Times today questioning why there should be this difference between the sexes. The reason, of course, was that my right hon. Friend took the ages at which people became entitled to an old-age pension. Now, however, there is no reason why the Chancellor, since he is making a start to lower the qualifying years below pension age, should not level up the sexes and give men full equality with women.

Mr. Amory: Does the right hon. Member not think that, as a bachelor, I should be putting myself into great danger if I adopted his suggestion?

Mr. Hall: I hardly think so. The Chancellor has now reached an almost impregnable position with both sexes, particularly with the fair sex. Therefore, anything that he might do would, I think, be accepted by them without harm to himself.
I should like to say one or two things about hardship. Throughout the years since the war, Member after Member, on both sides, has tried to get the Chancellor of the day to pay post-war credits to various categories of people who were suffering hardship. Up to now, successive Chancellors have taken the view that it was quite impossible to define hardship with any degree of fairness as between one type and another.
The Chancellor, very daringly, has made a start. Some of his categories are excellent—for example, the blind. I take it that not only those who are blind now, but those who may later become blind, will immediately qualify for post-war credits if they are entitled to them. We can easily distinguish also people who are in receipt of unemployability allowance. No question arises with them. They will be entitled to their credits and

one will know exactly who they are. The same is true of people who receive constant attendance allowances. Here again, there is no difficulty about knowing with whom we are dealing. It is easy to ascertain who these people are and to judge of their entitlement.
It is not so easy, however—perhaps the Financial Secretary to the Treasury will deal with this point when he replies—to define those who have been in receipt of National Assistance for 12 weeks as from 7th April. I am not sure, and perhaps later we may have this point cleared up, whether it is only those who have been on for the 12 weeks immediately following the seventh, or people who from now onwards will have been on National Assistance for any 12 weeks in succession. Then, too, does not this difficulty arise, that they cannot apply till after the twelfth week? It may well be that when they do apply it will take some time for them to get payment of their credits and by that time they may have ceased to be drawing National Assistance.
Old-age pensioners who draw National Assistance are easy to discover, but a man who is unemployed, who has been unemployed for 12 weeks, may quite definitely get work in the thirteenth or fourteenth week. Does that mean that the fact that he has been out for 12 weeks drawing National Assistance will entitle him, willy-nilly, to his post-war credit?
One or two Members have suggested that those who are not going to draw their post-war credits under the Bill should be given some sort of negotiable instrument which they may, I imagine, sell, or deposit with a bank, or in some other way turn, if they wish, into immediate cash. The difficulty here, as I see it, is that nobody knows what these post-war credits will be worth. Obviously, for someone who is to deal in these credits it will be a gamble. He will say to the person who wants to turn his postwar credit instrument into cash, "I do not know when some Chancellor of the Exchequer will pay this. It may not be for twenty years. Therefore, the discount will be fairly substantial". We must avoid, if we can, letting a situation of that kind arise.
My right hon. Friend the Member for Smethwick (Mr. Gordon Walker) quoted Sir Kingsley Wood as saying, in his


Budget speech, that at the end of the war holders of post-war credits would have the amount put in the Post Office Savings Bank for them. Sir Kingsley did say that in his Budget speech, but in the Finance Bill which followed nothing of the kind was said. All that was indicated there was, as I think the Chancellor of the Exchequer told us when he opened this debate, that they would be repaid as soon as might be after the end of the war.
Let me refer to two other points. The first is death duties. Will widows who will now he able to draw the post-war credits of their late husbands have a demand for any death duties which may be payable? Will the estate be reopened and an assessment made? I think that we should be informed so that these widows shall know what the position will be. The second is this, and here I speak under correction. I am under the impression that the certificates which were issued to individuals at the time by the local Income Tax offices bore a notification to the effect that they were provisional only and should not be taken as an indication that payment for that amount would be made. If this is correct, then, if I may say so to my hon. Friend the Member for Westhoughton (Mr. J. T. Price), it does largely destroy the claim that those certificates should be taken at their face value even if the people who receive them afterwards had part of them set-off against tax arrears.
Finally, may I say that I welcome the Bill? The Chancellor of the Exchequer is to be congratulated on making a real attempt at getting rid of this burden which has not only appeared to many people insoluble, but has caused the post-bags of Members year by year to be inflated by letters from those who felt in some way that the State was not playing fair with them. Here we have, at long last, a plan to liquidate more quickly the substantial amount still outstanding. I congratulate the Chancellor on the Bill.

4.56 p.m.

Mr. J. Grimond: I, too, am very glad indeed that the Chancellor has made a start with the repayment of the post-war credits. The situation has been something of a scandal. I think that many people were under the

impression that the Government were going to repay these credits long since and as the years went by, and this was not done even for those who were needy and suffering hardship, there grew irritation because the Government had not met an obligation and because people were entitled to something on which they were unable to get their hands. I believe, too, it was a reflection on the standing of the British Government themselves.
I am also glad that the Chancellor of the Exchequer has been brave enough to make exceptions. It seems to me that one of the things we have to fight against in politics is the view that if Johnny has any jam for tea everybody else must have some jam, too, so that it gets spread so thin it is no good to anyone.
I do not share the rather gloomy forebodings expressed by the right hon. Gentleman the Member for Colne Valley (Mr. Glenvil Hall) about the Chancellor's future. It seems to me than he has shown an almost feminine intuition in knowing that the country will willingly put up with the illogicalities, and, therefore, I do not despair of his getting married some time in future.
I also agree with the right hon. Gentleman the Member for Colne Valley that the Bill, particularly with the process of the exceptions, will throw a very heavy burden on the Inland Revenue, and I think that we would all join with the Chancellor in expressing our thanks to the Inland Revenue because it is to tackle this rather delicate and difficult job.
I do not know how far the right hon. Gentleman was right in what he said about the certificates, but I think that its position is obscure to many people. I believe that they are only a sort of conditional warning that something might be done and were not definite promises to pay, though they have often been considered as such.
In the debate on the Budget I raised a question which has been raised this afternoon already, whether these post-war credits are to be made negotiable. I hope that I shall be given some credit for scrupulous consistency in raising it again. There have been two objections put against making them negotiable. One's inflation. Candidly, I do not quite see why. It seems to me that the argument of the hon. Member for Dover (Mr. Arbuthnot) is a sound argument, that if


they are genuinely negotiable, that is to say, that the buyer has to pay some cash out of his savings, there is really a transference of these credits from one man to another; and I would not have thought that necessarily any extra money or credit was injected in the system. I quite see that if they were put in anything like Post Office Savings Bank deposits, of course there might be, or would be. But if they are genuinely negotiable securities I do not see why that should be so, unless you assume that a great deal more money is necessarily spent by the seller.
The second objection, that this would be administratively difficult, I can see. But, nevertheless, while I grant that the Chancellor cannot be expected to do anything about it in this Bill, I hope that a substantial promise to look closely into this in the coming year will be given. There are ways whereby, on the face of it, this might be done. There is, for instance, the possibility that the credits could be grouped by various times of repayment and this would mean that people would know when to expect to receive their cash.
There is another way of making it possible for people to transfer out of post-war credits into some form of ordinary Government stock which would be repayable at some definite date. There is the possibility of stamping the date of repayment on them, again as suggested by the hon. Member for Dover. I can see administrative difficulties, but I should have thought that now that the Chancellor has embarked upon this admittedly tricky business of repayment he should feel more comfortable about going forward on this kind of line. Presumably, he now hopes to continue the process. Indeed, he has said so. He is also now paying interest and, therefore, post-war credits are more like ordinary Government securities.
The suggestion that people might part with them for very little and that might damage the Government's credit is not a very strong objection. For better or worse, many people have burned their fingers rather severely through buying Government securities which have fallen in value. This will not be anything new in post-war experience for any man or woman, though that may not be an argument for perpetuating it.

Mr. A. E. Hunter: Would there not be a danger that a person who was heavily in debt and was hard-pressed for money might sell post-war credits at half their value?

Mr. Grimond: That would apply to anything. It might apply to that person's savings or to his house. I do not think that the Government can now be expected to be in the position of perpetual trustees for all the 11 million people who hold post-war credits. I hope, therefore, that the Chancellor will look at the possibility of some gradual scheme by which they can be dated and made transferable.
I do not want to press for other extensions. The Chancellor's request that we should not plead our favourite hard cases is reasonable. We should thank him for the present concessions and withhold our fire for later in the year, when he may bring forward further proposals. The right hon. Member for Smethwick (Mr. Gordon Walker) raised the question whether it is proper that disbursements of this sort should be merely approved by Parliament subject to the negative Resolution procedure. So much is improper that this tiny impropriety is a very small illegitimate baby indeed. The Chancellor, for example, is the main factor in putting up interest rates, and that can be done without consulting the House at all. The time is coming when we must look at the whole question of the control of expenditure by the House of Commons.

Mr. Glenvil Hall: The raising and lowering of interest rates is done by the Chancellor through the authority of an Act of Parliament.

Mr. Grimond: Yes, but the movement up and down is not discussed by Parliament, and the interest rate is an important economic instrument. This, as I have said, is a minor impropriety and I think that we can well leave this power to the present Chancellor, for whom we have such respect, subject to the need for an overall review of the control of expenditure.
I re-echo the Chancellor's words from his Budget speech last year, that this sort of thing should never be allowed to occur again. I agree with the right hon. Member for Colne Valley that these post-war credits. no doubt introduced with the


best intentions, were a mistake and that they have given people a wrong impression about their rights and about the status of these certificates. The Government took from people what they should not have taken—

Mr. Glenvil Hall: The Chancellor at the time raised £250 million, of which he said that £150 million would be repaid at the end of the war.

Mr. Grimond: Quite, and that he was unable to do. It is a queer way of financing at the best of times. It might well have been overlooked in a world war, but it is time that we got away from what I might call " gimmick " finance and got on to a sound basis which can be maintained. It can be maintained only if we have sonic confidence that we are not again to have a galloping inflation.

5.5 p.m.

Mr. Raymond Gower: I think that my right hon. Friend the Chancellor will be satisfied that the Bill is accepted on both sides of the House as an excellent Measure. He will also have derived the impression that in the minds of most people the history of post-war credits cannot be regarded as very happy or particularly creditable to anybody who has been associated with the country's administration in the post-war period.
I am very happy about the proposals to repay post-war credits by lowering the qualifying ages. I am satisfied with my right hon. Friend's explanation of the extent to which he is able to do that at present. I am also pleased that he has taken the power to extend and accelerate the process. Another method which my right hon. Friend is adopting is perhaps somewhat more controversial, namely, the repayment of credits in certain cases of hardship. I well remember asking at Question Time some months ago about the possibility of repayment of these credits in cases where a person had been in receipt of National Assistance continuously for twelve months. Obviously, I then had in view the fact that if a person had received assistance for such a long period he could be regarded as a person chronically in need of National Assistance. My right hon. Friend has gone much further and has shortened the qualifying period to twelve weeks for the person who is continuously in receipt of National Assistance.
If my right hon. Friend has been able to do that, I would respectfully suggest to him that cases where a person has been in receipt of National Assistance for long periods are not the only hardship cases that come to the notice of the National Assistance Board. Could not my right hon. Friend contemplate extending this category to cover cases where a certificate is given by the National Assistance Board that the case is one of substantial hardship? The Board is well equipped and experienced in judging hardship. I am sure that the hon. Member for Sowerby (Mr. Houghton) would agree that one of the Board's major functions is to assess and judge hardship. If the Board is prepared to give a certificate that a case is one of definite and substantial hardship, would my right hon. Friend be prepared to include that category of cases with the others experimentally in this first stage? I imagine that the House will accept the other categories which my right hon. Friend has suggested— blind persons, persons in receipt of a constant attendance allowance, and persons receiving unemployability supplements.
The repayment of post-war credits to the dependants of deceased holders is a decided step forward. It will remove a great sense of grievance. I am sure that many hon. Member have had experience of cases where a person has died and his widow and dependents have had to wait for a long time for these credits. I understand that in all cases these persons will now receive payment as quickly as the technical and administrative arrangements can be completed.
I should like to develop what was said in an interjection by the hon. Member for Westhoughton (Mr. J. T. Price). The possibility of substantial drawbacks for tax unpaid, of which people at the moment may not be aware, is a matter for serious concern. I have come across cases where, under the prevailing practice, widows have qualified for repayment and have made their claims and then, to their consternation, have found that as much as one-third of the sum due has been withheld for alleged unpaid tax because the husband apparently had not paid some proportion of his tax back in 1942.
Obviously, this can be a matter of grievance and of doubt, and whilst I appreciate the remark made by my right


hon. Friend that he would deem it impossible for the Revenue to make payments for tax not received, does he not feel that after such a long lapse of time, and where very small amounts are involved, it would be proper for, perhaps, a different view to be taken of these cases than would normally be taken?
As the right hon. Member for Smethwick (Mr. Gordon Walker) pointed out, all these people have for many years held a certificate which is virtually a promise to pay by the State. While it is true, perhaps, that the certificate was a promise to pay £100, and while, on the other side, there may have been a tax liability of say, £20, cannot my right hon. Friend set against that the fact that during all these years not only has the security tended to depreciate in value but that the people concerned have received none of the interest which is now to be introduced for the first time?

Mr. Douglas Houghton: In making this suggestion, would the hon. Gentleman care to tell the House what he would do about past cases where these deductions have been made from post-war credits? Would he make adjustments for them or would he wipe them out?

Mr. Gower: There is always the difficulty that if one attempts to rectify present and future grievances one is faced with claims about past grievances. I doubt whether what the hon. Gentleman has said would be possible, and, indeed, whether it would be desirable. On the other hand, I do not see why because grievances have been involved in past cases we should thereby be prohibited from lessening the grievances of the future.

Mr. Glenvil Hall: What about the people who honoured their obligations and who have no arrears? Is anything to be done for them?

Mr. Gower: I appreciate the difficulty of these cases, but I reiterate that the people to whom I am referring have not, in most cases, been aware of any deficiencies of tax. In the majority of cases their husbands or fathers died, probably, in the immediate post-war years. For something like fourteen years they have held a document which, on the face of it, will entitle them some day to a payment

of £X, and now, suddenly and without warning, they find that that is not the case.
I am setting against the fact that there may or may not have been certain small arrears, firstly, the fact that all the time these people have been deprived of the payment which they expected to receive at the end of the war; secondly, the fact that the security has depreciated in value, and, thirdly, that they have not received any interest on the money outstanding. I hope that a sympathetic view can be taken of these cases, as, in fact, I think has been done in some cases in the past where the amounts involved were very small. I am asking for the assurance that this will be done in the future.
Then we come to the question of the Chancellor's problem in the future. I hope that my right hon. Friend will examine the possibility, to which I referred in an interjection, to which the hon. Member for Orkney and Shetland (Mr. Grimond) and my hon. Friend the Member for Dover (Mr. Arbuthnot) referred and which I have previously raised at Question Time, as have other hon. Members, of solving a lot of his future problems by making post-war credits in some form or other negotiable or transferable. I cannot see why, if someone has a post-war credit and if under some new regulation he will know that its repayment by the State will not be later than a certain date—that is all he wants to know; at present, of course, the date is uncertain— he should not be allowed to sell it for a monetary consideration.
If my right hon. Friend could accept the suggestion made by my hon. Friend the Member for Dover that a final date of payment should be given, then the holder of the post-war credit would know that there was a final date. My right hon. Friend could introduce the necessary Amendment to the Bill to make the document transferable. I cannot see why, if the holder sells a post-war credit for a monetary consideration which another person has saved or earned, that should lead to serious inflation. Surely, the additional money that will be circulated by the person who sells the post-war credit will be offset to some extent by the less amount of money available to the previous owner.

Mr. Chetwynd: Surely that is quite wrong, because the person who is selling is only doing so because he wants to


spend the money whereas the person buying his security is buying it because he does not want to spend the money. Therefore, there is additional money being spent.

Mr. Gower: That may or may not be so. It would be the case, of course, if everyone decided to sell immediately. My right hon. Friend implied that there was the danger of inflation, but surely that is not necessarily the case. The Treasury obligation to pay would not be increased. That is the advantage which might appeal to my right hon. Friend. The fact that the transfer is made does not make the Treasury have to pay increased amounts at an earlier date. I hope. therefore, that my right hon. Friend will consider the matter.
I appreciate to some degree the point made by the hon. Member for Stockton-on-Tees (Mr. Chetwynd). but I cannot believe that what I have suggested would be as inflationary as if all post-war credits were paid by the State on a certain date. I believe that the additional amount of money created in this way would have a far smaller effect than would be involved if all the credits were to be repaid by the Treasury.
In summary. what is now proposed is a long awaited step in the right direction. It is the first stage in a process that must necessarily take a much longer time. 1 am sure that my right hon. Friend knows that the Bill is not only obviously approved by the House but is a Measure which will give modest, and in some cases great, satisfaction to the many of those people who have waited so long and patiently for what they conceive to be due to them.

5.17 p.m.

Mr. George Chetwynd: I am sorry that the Chancellor is leaving the Chamber because I was going to say something kind about him. In view of some of the harsher things said about the right hon. Gentleman on other parts of the Budget last week, I think it would be pleasant for him to hear some nice things said about him today.
The right hon. Gentleman will recall that in Northallerton there is a public house named after him called "The Jolly Minister," where last week its customers were drinking his health in reduced price

beer. I am sure that there are many who wish something to be done about postwar credits who will also pay him a tribute when the time comes. Having said that, I do not mind if the right hon. Gentleman wishes to leave us.
We know, of course, that the present Chancellor and any Chancellor looks upon post-war credits as part of his normal financial machinery, and the fact that the right hon. Gentleman has been able to pay out so much this year is part of his general attack on under consumption and stagnation of production. The repayments are part of the process of pump priming in order to get industrial activity moving once again. Post-war credits are a long-standing source of annoyance and complaint, and people will feel very much happier that at long last the matter is being tackled in a dynamic way.
I want to deal with the four main proposals put forward by the right hon. Gentleman for dealing with the post-war credit problem. First, the ages have been lowered to 63 for men and 58 for women, which will cost £35 million. 1 can see the administrative easiness in doing this. but I am not sure that it is right. When my right hon. Friend the Member for Bishop Auckland (Mr. Dalton) made it 65 and 60, that could be justified on clear social grounds, but now we are moving out of that bracket and it is purely an arbitrary decision whether the matter should be dealt with year by year or two years at a time or in some other way completely.
The Chancellor could well have decided to repay post-war credits to those whose names begin with A, B or C. That would have satisfied both the Chancellor and myself, but my hon. Friend the Member for Manchester, Gorton (Mr. Zilliacus) would have been very dissatisfied. On the other hand, the Chancellor could have chosen to pay post-war credit-holders in all the marginal Conservative constituencies, which might have been a very attractive method from the Chancellor's point of view. The Chancellor, however, has chosen the 63-58 process. and no doubt the intention is that next year it may be possible to lower the ages to 60 and 56.
I now come to the question of payments on death. We all recognise that widows in general are perhaps one of the


most hardest hit sections of the community. Anything that we can do for them, therefore, will be welcome. What the Chancellor is doing, however, is making the tragedy of death the means of everybody receiving the money, whether they need it or not. Some widows may not be in financial need. It may be that the descendants of the original post-war credit holder may be very well off. This is not a compassionate or hardship method, although I recognise that many widows can come under the hardship Clause later. Not all widows are needy, and I appeal to those who do not need the money to invest it in some form of National Savings and not to use it for increasing consumption if it is not necessary.
I should like to mention another point on hardship. I think that it is right that the Chancellor should have taken this decision, even if it creates difficulties for him and even if there are marginal cases which we shall have to bring to his notice from time to time. Over the past years, I have been as assiduous as any hon. Member in trying to get a concession on the grounds of hardship. I have never believed the story put out by the Treasury that it was impossible. I remember a speech which I made in the Budget debate of 1954, when I said that if one wills the end, one can will the means. When the Chancellor directs that a way must be found, a way is found. I think that most people will recognise that the Chancellor's solution is as just as possible in the circumstances.
I now turn to the category of people who are to be paid their post-war credits when they have been in receipt of twelve weeks' continuous National Assistance from the introduction of the Budget. Why cannot it be when they have received twelve weeks' continuous National Assistance even before the Budget? I should have thought that the fact that a person was in receipt of twelve weeks' National Assistance would show that he was in a position of destitution. Why cannot the Chancellor extend the proposal to perhaps any twelve weeks in a given six months? There may be cases in which a person just qualifies for assistance in one week but does not qualify in the next week. If a person is in receipt of National Assistance for twelve weeks it means that he is on the

borderline of subsistence and comes within the hardship category. I realise that this proposal cannot be carried out in this Bill, but I hope that it will be borne in mind on a later occasion.
Blind persons come within a clearly defined category which we all agree is deserving of receiving the post-war credit. May we know how many people are concerned? There must be a few who were in a position during the war years to be earning sufficient money to be entitled to the post-war credit in any case. The amounts that they will get will be very small. If we could have some figures on that point, again it would be helpful.
Also, how many people in receipt of constant attendance allowances and unemployment supplement will be dealt with under the provisions? The Chancellor has budgeted for £2 'million to be spent in this direction. Obviously, that by itself means that there are not many people in these categories, but I think that they are being dealt with in the right way. As the debate has proceeded, I have been trying to think of any other clearly defined category of hardship which we could ask to be brought in. I cannot think of a ready-made class of persons on the spur of the moment. I can think of individuals, but the Chancellor is not in a position to deal with individual cases. I only wish he were and that he could let the National Assistance boards handle this matter on an individual basis. However, I realise his difficulties and I accept the categories which he has specified for the time being.
The other point with which I want to deal concerns the 2½ per cent. interest. I suggested that interest should be paid in the Budget debate on 6th April, 1954. One of the points which comes to my mind is, could not the interest be made payable before the date proposed? I suppose that the objection is that the people who have been paid out would have to receive their entitlement also, and it is, therefore, much better to start with a clean slate from October this year.
The alternative method of payment which I favour and which I have mentioned to the Financial Secretary during Question Time is repayment by bands of income as paid in year by year. To take the outstanding amounts for 1941–42, the figure as at 31st March, 1958, was £84 million. In 1942–43 £101 million, in


1943–44 only £25 million, because some money was taken back and set off against Income Tax due for the year, in 1944–45 £128 million, and in 1945–-46 £110 m Ilion. The Chancellor this year is giving back £89 million. He could have chosen to give everyone entitled to postwar credit for 1941–42 all that they were entitled to and still have a few million pounds for special hardship cases. On the other hand, he could have got rid of the year 1943–44 by taking it out altogether. I suppose that the argument is that this means that there would have to be four or five bites at the cherry, with all the consequent administrative difficulties, expense, and delay.
I believe that administrative difficulties should not be regarded when dealing with equity. I am sure it is better that everybody should get something on a clearly recognised basis such as the one I have suggested rather than that a few should receive the lot in an arbitrary fashion. In spite of the difficulties. I think that the money should be paid out year by year or that the Chancellor should pay what he feels he can afford. All those entitled to post-war credits would get something in that way. They may not get the whole lot, but they would get something.
At present, one-third of the population over 25 years of age holds post-war credits. If someone who was 18 in 1941 is entitled to the post-war credit, at the present rate, unless something else is done, it will be 1986 before that person is repaid. Obviously that is too long to wait. If a person was 20 in 1941, it would be 1984 before he is repaid. In any case, it will be a long time before those people see their money back. Naturally, the longer they have to wait, the more resentful they will become, especially when they see other people being repaid in full. I hope that in future the Chancellor will consider that point and bear in mind that the administrative difficulties may not be as great as he has been led to believe.
By this form of payment we would have a greater guarantee that the recipient will get something like the true value of his money. Already he has lost one-third, or even more of the value of his post-war credits. Could the Chancellor guarantee that, when repaid, the credits will have the same purchasing power as they have to-day? In other

words, could he undertake to guarantee the post-war credit against a fall in the value of money? It can be done in the case of superannuation, pensions and the like, and we owe it to the post-war credit holder that he should get the full value, regardless of any fall in the value of money—

Mr. Walter Monslow: Would not that be discriminating? Would not my hon. Friend say that there ought to be retrospective payment in respect of those credits now to be paid?

Mr. Chetwynd: I would be happy if it were to start from now on. It would be something, and the sins of the Government in this matter cannot be carried too far back.
The National Assistance Board will play a very important part in these repayments. I have already spoken to the staff at my local office, and they are quite prepared to work as much overtime as necessary in order to get the scheme in full working order. By now, some directive could have been sent to the National Assistance officers telling them to list those likely to have the necessary twelve weeks on National Assistance so that the necessary forms could be given to them. Further, instead of putting the forms only in the Post Office, it would be a convenience if some could be sent to the National Assistance Board officers who, in turn, could give them to those known to them to be likely to be on assistance for quite a time. Could we also have some idea of the number of people to be dealt with through the National Assistance Board?
Then there is the certificate itself. Only last weekend I had occasion to try to help a widow, who had only recently lost her husband, to sort out his financial affairs. She had been looking all over the place for his post-war credit certificates, but could not find them. I explained that I believed the certificate was not necessary to secure repayment— that it is only an indication that the money is there, and that somewhere in the recesses of the Treasury there is a record of the amount due to each holder. It should be made quite clear that even if the certificate cannot be found a check is kept elsewhere, and the amounts due can be paid without the certificate. That knowledge would allay a great deal of anxiety.
There is a great attraction in paying out the money due in the form of National Savings Certificates. The onus would then be on the person to go to the trouble of cashing those certificates. Many who did not need the money urgently would not take that trouble. I am sure that if payment were made in National Savings Certificates instead of by cheque, money order or whatever it may be, a large amount would remain in the National Savings Movement.
I hope that the Chancellor's timetable will be accurate. We certainly do not want to delay the Bill, either in the Committee stage or in its later stages. We want it to go through very quickly so that by the beginning of June— which, I believe, is the target date—the Chancellor can start paying out this money.
The right hon. Gentleman has taken power to act by regulation in future, and we have all been gaily assuming that he has in mind beneficial powers. I should like him to assure the House that, in future regulations, he will not take back what he has conceded now. In other words, I hope that he will not be driven to restricting the categories—taking out the widows, or putting up the ages again —and that the future changes will be improvements, and not changes for the worse.
Can he give us some idea of his future intentions? Assuming that he has the money and that our economic position is such that he needs to put that money back into public use, does he think of lowering the age year by year and of increasing the categories of hardship and compassionate cases? Finally, I hope that he will not close his mind to a general payment on the lines that I indicated earlier.

5.35 p.m.

Mr. Norman Cole: I should like to thank and congratulate my right hon. Friend for his statement on this subject in his Budget, and also for this Bill, and I am sure that those thanks and congratulations will be echoed by the many people who will be affected in the not-too distant future by these repayments. I particularly thank my right hon. Friend for lowering the qualifying ages. He is taking powers, we presume, to lower those ages again in the future, and I hope that he will not

be too slow in doing so. Payment of interest from the latter part of this year will give great satisfaction to those who have felt some degree of grievance because they have not been able to encash their post-war credits or put them to other uses.
The Budget statement and this Bill have brought post-war credits really to light, and these concessions have brought them to favourable light. It must be understood that public attention will now be focussed, perhaps more than at any other time since the war, on post-war credits. I am sure that many people are now looking up their certificates, and even though they know that they will not get the money in the near future, they can at least comfort themselves with the thought that things are on the move, and that they have money coming to them.
That brings me to something that concerns me very much. I am sure that nine-tenths of those affected—perhaps 99 out of every 100—have no idea that the amount shown on the certificate may not be absolutely 100 per cent. exact. Although this has been mentioned in the House on various occasions, I think that only a small proportion of people have caught up with that fact. There will be many disappointments, and the more quickly the post-war credits are paid the sooner will the disappointment be felt.
The certificate is a piece of paper which has all the marks of an authentic document. To many people who do not pay much attention to financial matters it is as good as a Treasury or a bank note. Nevertheless, many holders will find that the amount shown is not the amount due.
I realise what a wonderful job the Inland Revenue staff do, both in this and in other directions, and I appreciate that they cannot check every post-war credit now extant. That would be quite impossible, and would, indeed, hold back the payments that we wish to see made as quickly as possible. But the Inland Revenue Department send, annually, an income return form to every taxpayer, together with very helpful notes on how to fill it up. The Inland Revenue authorities also have to write to taxpayers on various matters.
I suggest to the Financial Secretary that the Inland Revenue Department could print slips—which could be put in


a prominent position at the top of a letter, say, or on the return form—pointing out that the amount of post-war credit shown on the certificate may not be correct, and that if the taxpayer returns it to the Department it will be checked and, if necessary, corrected.
I believe that many people would return their post-war credits for this purpose. Although it would not eliminate all the potential disappointment, it would alert people to possible inaccuracies and give them an opportunity for checking their credits. Moreover, if they did nothing in this respect, and in due course found that the amount was different, they would be less disappointed because they would know that they had been given a chance to find out the correct amount. I hope, therefore, that my right hon. Friend will provide something of this nature. The only additional work involved will be in respect of people who return the certificates to be checked. In any case, the Inland Revenue will have to explain, when the time comes for repayment, that the amount is not correct, so it would be better to do this as soon as possible.
This point has emerged with some force during the debate and it is important because there are many people who have little or no knowledge of Income Tax, even though they pay through P.A.Y.E. The more we can do to enlighten them and avoid disappointment, the better. Even if the difference is that between £27 and £35, it may mean a great deal to them.
I congratulate my right hon. Friend on the action he is taking in respect of cases of hardship and payment to the widow on the death of the holder. With great respect to the hon. Gentleman the Member for Stockton-on-Tees (Mr. Chetwynd), I do not think it matters whether the widow has large or small means, because it is a good thing to make this concession when the holder of a post-war credit passes away. As regards the other concessions to those in receipt of constant attendance or unemployability allowances, and those who have been twelve weeks on National Assistance, I hope my right hon. Friend will look upon those cases as generously as possible, and also I hope he will consider any other cases of hardship which may occur to him or be put to him by hon. Members.
The question of transferability has been much canvassed in the last few months, and its possible inflationary effect has been referred to today. The hon. Member for Stockton-on-Tees suggested that those who sold a post-war credit would be doing so because they needed the money, and that those who bought them would be doing so from funds in hand. and that therefore this might lead to inflation, because the seller of the credit would spend the money. That does not follow necessarily. The seller might want to use the money to start a business, to increase his business or to increase the stock in his business. Again, he may want to use it for his home or for his family. The only possible degree of inflation which might flow from transferability should be weighed against the greater virtue of allowing people to get something which, after many years. is more than a frozen piece of paper, and which they can take to a bank or can discount with some other reputable authority. My right hon. Friend has added to the force of this argument by making the post-war credits for the first time carry interest free of tax.
The point that no one knows when this security will be redeemed is not a valid one. We know the maximum date. We know that the respective ages of 58 and 63 will not be made higher so it is up to the persons who are buying and selling the credits to work out between them a fair average price in the economic atmosphere of the time, and I think we can leave it to the common sense of our people to reach a fair bargain. Not everyone will want to sell his post-war credits. Many people will leave them as they are, but the facilities for transferability should be available, and so I urge my right hon. Friend and the Treasury to do something on these lines. If it is necessary for the certificates to be certified for the buyer, even that is not impossible.
The concessions of my right hon. Friend will involve a considerable amount of work for the various staffs of the Inland Revenue, so this may be the right moment at which to pay a tribute to all those dealing with taxation. I want to pay my personal tribute to the courtesy and help the' give in the face of increasing work. It should be put on record in this House that we appreciate their work to implement our decisions. Finally, may


I repeat my thanks and congratulations to my right hon. Friend. Like the hon. Member for Stockton-on-Tees, I hope that the Bill will get through the House quickly, so that the people who are entitled to repayment will receive it at the earliest possible moment.

5.48 p.m.

Mr. A. E. Hunter: We can all join with the hon. Gentleman the Member for Bedfordshire, South (Mr. Cole) in thanking the Inland Revenue in advance for the great amount of work in which they will be involved in paying out post-war credits and in answering any queries which may arise. I am pleased that my hon. Friend the Member for Sowerby (Mr. Houghton) is sitting on our Front Bench, because he is an expert not only on post-war credits but on all Income Tax problems and the Inland Revenue staff. I hope that he will have many more opportunities in the not too distant future to speak from the Front Bench.
I am glad to have an opportunity to speak in this debate on the Second Reading of the Bill. The Chancellor of the Exchequer has been in office not much more than a year and, in this matter, he seems to be a more sympathetic man than his predecessors. I have had correspondence with the right hon. Gentleman about post-war credits in hardship and disablement cases, and in his replies to me he has shown that he is sympathetic to the points put by me on behalf of my constituents.
Although I thank the Chancellor for making an honest attempt to start to meet the obligations and promises made by this country during the war, I think the holders of post-war credits have been treated badly. They have been the forgotten men and women of Great Britain. Since my election to Parliament, I have, in response to requests from my constituents, raised the matter of post-war credits in the House on a number of occasions. Other hon. Members have done the same. I am very glad that the Chancellor has at last made an attempt to deal with the matter.
Post-war credits were compulsorily deducted from people's wages and salaries between 1941 and 1944. People were not asked to lend as in the National Savings Movement. Through the Income

Tax system, these amounts were taken from their wages weekly or from their salaries monthly. They had no say in the matter. The arrangement was decided upon by the House. The Government, therefore, in paying out post-war credits, are not giving a bonus or a free give away; they are merely paying out what is due to the men and women from whose incomes the deductions were made during the war.
In 1945, at the conclusion of the Second World War, the economic state of the country being what it was, people understood that the money could not be paid out. There were millions of men to be released from the Services, there was a lack of raw materials, the export trade had to be built up, there were no consumer goods in the shops and stores, and it was clear that all that money in postwar credits could not be paid out in the early years after 1945. But the Labour Government made a start by paying out post-war credits to men at 65 and women at 60. Since then, very little has been done, and, during the last eight years, there has been a very strong feeling in the country that the whole matter has been consistently shelved. There has been deep feeling on this subject.
The loss of purchasing power is something which the Government should consider. I recently put some questions to the Chancellor about this which were answered by the Financial Secretary. 1 asked what the purchasing power of £100 of post-war credits deducted in 1942 now was, and the Financial Secretary said that the figure was £52 16s. One hundred pounds deducted in 1943 is now worth £54 14s. One hundred pounds deducted in 1944 is now worth £56. One can see, therefore, that the purchasing power of post-war credits has fallen by nearly 50 per cent., and this is not to the credit of the Government.
The Chancellor is lowering the age of repayment for men to 63 and for women to 58. I wish that he had gone further. I feel that he should have taken a bolder step and reduced the ages to 60 and 55 respectively.
I want now to say a word about the proposal to pay 2½ per cent. interest to holders of post-war credits which remain unpaid after 1st October. This step has


been taken very late. To be logical, as in dealing with other claims arising out of the war, the Chancellor should date the interest back to 1942, 1943 and 1944. If a man lost a house during the war and received compensation, he very rightly had 2½ per cent. interest on the money until he was pa id. If he lost goods, fixtures or chattels, lie had 2½ per cent. interest from the date of the damage. The money in post-war credits was compulsorily deducted from wages or salaries, and the payment of interest is making a very late start indeed. 16 or 17 years afterwards. I hope, therefore, that the Chancellor will look at the matter of interest again. People have a strong and logical claim for interest dating from the time when the money was deducted from their wages and salaries.
Many hardship cases have been raised in the House from time to time, and I am glad that the Chancellor intends now to repay post-war credits to blind persons, to disabled persons and the next of kin of holders who, unfortunately, have died. I hope that he will go further where there is genuine distress. I know that these matters are not simple and it will not be easy for the Inland Revenue to deal with them. I feel certain, nevertheless, that in cases of real hardship or distress the Chancellor can count upon the very competent officials of the National Assistance Board giving all possible help to the Inland Revenue, so that, without delay, post-war credits may be paid on hardship grounds to those who need them.
It has been said that the deduction of post-war credits should not have been done and should never he done again. Of course, we hope that circumstances will never arise again when it is necessary to do it. No one wants another war. If a second scheme is ever tried, people will be very suspicious of it. Although 1 appreciate that in the post-war years both Governments have had to face big problems in housing, exports and consumer goods, I feel that to allow the matter to go on for 16 or 17 years is quite wrong. As I have said, the Labour Government made a start at a very difficult time in 1946, one year after the war, by repaying credits to men and women at the ages of 65 and 60. It has taken this Government twelve years to make another move.
After taking this very late step, the Chancellor will, I hope, press ahead so

that all holders of post-war credits will be paid. I hope particularly that cases of hardship and disabled persons will be dealt with without delay. I am very pleased to support the Second Reading of the Bill, and I hope that it will be improved during the Committee stage.

5.57 p.m.

Mr. Ray Mawby: My principal reason for intervening is that the hon. Member for Stockton-on-Tees (Mr. Chetwynd) referred to me when making some of his calculations. He spoke about young men who would not draw their post-war credits until 1984. I congratulate my right hon. Friend and thank him for the fact that I shall draw my postwar credits in 1985 instead of in 1987.
It should be pointed out, I think, that many of us at the time aged eighteen and nineteen—I am sure that my case is not a solitary one—were serving apprenticeships in industry and, as can readily be imagined, the money earned in the ordinary apprenticeship did not really bring one's post-war credits to a very high level. Nevertheless, many apprentices as well as other people, in engineering particularly, were at that time working extremely long hours in trying to make sure that our war effort was successful. We are now to have our post-war credits repaid two years earlier. I am not much of a mathematician, but taking into account the compound interest which is to be paid on my small amount, I think that by 1985 —so long as George Orwell's prophecy does not prove true—I should have a fairly considerable amount to draw.
I believe that this is the first time that a Chancellor of the Exchequer has made " an honest woman " of the post-war credit. The whole arrangement for taking money from taxpayers, with a promise to pay at some time in the future, with no date fixed whatever, was certainly something which had to be regulated and put right at the earliest possible moment. Now, at least, we can see that the payment of these post-war credits has been put on a proper basis and people as young as myself do not mind waiting in the queue so long as they will carry reasonable interest rates.
My right hon. Friend has selected all the groups of needy people which can be recognised, and that is as far as he can be asked to go. To request that he should deal with particular cases would


be to impose too great a burden upon him and prevent the speedy payment to those who are in need. The Ministry of Pensions and National Service and other Departments can easily calculate the number of those people who will fall into such groups. I congratulate my right hon. Friend on putting the payment of these credits on to a proper basis.
I am concerned about them being made negotiable. I agree with what was said by the hon. Member for Stockton-on-Tees. A person who is in debt might be tempted to sell his post-war credits cheaply, or might use them as security against extra credit to obtain goods, which might cause a certain amount of inflation. I should like to warn my right hon. Friend about the dangers which would arise were these credits made negotiable. I welcome the Bill and I think it a good Measure.

6.3 p.m.

Mr. Donald Wade: I wish to put a question to the Minister about the transferability of post-war credits. I support what was said by my hon. Friend the Member for Orkney and Shetland (Mr. Grimond), but I do not intend to go over the ground which he traversed. I welcome the Bill. I am glad that the Government have taken some steps towards repaying post-war credits.
I wish to know the grounds on which the Government object to any method of transferability regarding these credits—unless, of course, the Government change their mind on that matter during the course of this debate. Is it because it is considered not a good idea that holders of post-war credits should be allowed to dispose of them? That is a paternalistic view. Or is it because the result might be inflationary, or because of administrative difficulties? I am not impressed with the first two reasons which I have suggested.
I can see that there may be administrative difficulties. But it would be practicable in my opinion, after post-war credit certificates had been checked, for the holders to take them to the Post Office, together with a birth certificate, and have the date when they would become due stamped upon them. After that, I do not see why a holder should not be allowed to dispose of his post-war credits if he wishes. I ask, therefore, on what grounds do the Government object to

the idea of transferability. Has there been a careful review of the administrative problems, and, if so, what conclusions were reached?

6.5 p.m.

Mr. Douglas Houghton: This has been an agreeable debate and the Chancellor of the Exchequer must be well satisfied with the way in which the Bill has been received by the House. Later on. when the right hon. Gentleman is facing storms of criticism for having given away too much or too little, or having given away money in all the wrong directions, it may be a comfort to him to allow his mind to dwell on this day. It is obvious that hon. Members are well satisfied with the Bill and that has allowed them to be drawn away from the Chamber in order to attend to the many other pressing tasks which right hon. and hon. Gentlemen have to perform.
The Bill is purely and simply an enabling Measure, as we all recognise. It will leave great power in the hands of the Government to pay out in future, by regulations and under such conditions as they may prescribe, a great deal more of the money held in post-war credits. For that reason alone the Bill is significant, if not historic. My right hon. Friend the Member for Smethwick (Mr. Gordon Walker) suggested a change in the method of authorising additional expenditure under the Bill, and that is a matter which we can discuss in more detail during the Committee stage.
I wish to look back for a few moments. There have been references to the conditions under which post-war credits were created. The other day I was looking up some of the original documents connected with a proposal made by the late Mr. John Maynard Keynes, as he then was, in The Times of 14th, 15th and 28th November, 1939, when he put forward his plan for financing the war out of what he called, quiet bluntly, " compulsory savings ". His idea was to have stoppages from wages. He called it, "deferred pay ". When we are looking at the question of repayment on account of hardship today, it is interesting to recall that he not only proposed that 2½ per cent. interest should be paid on this deferred pay but made provision for the repay-


ment of the capital sum on account of hardship which he said could be paid
in any case approved by his friendly society or in the case of the Post Office Savings Bank, by a local committee, as, for example, to meet illness, unemployment, or special family expenses.
One might boggle at the number of committees, tribunals and referees necessary to apply those conditions for repayment on account of hardship. He said:
In general, the deposits are not intended to be used until after the war, when they would he released by a series of instalments at dates, not unduly delayed, to be fixed by the Government. Meanwhile they should not reckon in calculations arising out of the Means Test or eligibility for old-age pensions or the Capital Levy.
We have not had to take account of post-war credits in connection with a capital levy, but his references to the means test are apposite today. He had this in mind:
The appropriate time for the ultimate release of the deposits will have arrived at the onset of the first post-war slump.
It might even be suggested that that is where we are now. At all events, we have been anxious recently on account of a recession, and the keynote of the Chancellor's Budget is expansion.
Mr. Keynes had in mind that repayment would avoid the necessity for raising other loans to pay for unemployment, or for public works, and the like, as a means of preventing unemployment. Those are echoes from the past, and the origins of post-war credits. Sir Kingsley Wood, when Chancellor of the Exchequer, adopted the main idea through the machinery of taxation. That is how postwar credits, as we have them today, came into existence.
Both parties have been in power in the years since the war and both have hesitated to release large sums of accumulated post-war credits in an economic situation where there was danger of inflation. It should, however, be said that my right hon. Friend the Member for Bishop Auckland (Mr. Dalton) broke the ice of post-war credits by beginning repayment in 1947 to those who reached the pensionable ages of 65 for men and 60 for women. I would remind the House that well over £200 million had already been repaid under the conditions laid down by my right hon. Friend before the Lord Privy Seal made the next move in 1954 to repay, in the

case of deceased holders, on the 65th or 60th anniversary, as the case might he, of the birth of a deceased holder. Previously it had been the widow, or whoever inherited the credit, who had to stand the test of age in order to secure repayment. By far the biggest block of post-war credits has been repaid under the initial release of credits for those who reach pensionable age.
It should not be overlooked that the disparity of age for repayment of postwar credits gives many wives a grievance. Wives have a lot of post-war credits wrapped up with those of their husbands. Married women workers during the war had post-war credits, too. They were given an opportunity for a while to ask for their own post-war credits to be separated from those of their husbands. When they were asked to do so they did not know that repayment would be made to men at 65 and to women at 60.
I bring their grievance forward at this late hour because some wives would certainly have asked for their post-war credits to be separated had they known that they would have been entitled to cash them five years sooner than their husbands. Unless there was some compelling reason at that time, women, being so considerate towards their husbands, were loth to ask for the separation of post-war credits in the absence of a strong financial reason for doing so. Separation might have caused domestic misunderstanding. The husband might have asked, "Why do you want your post-war credits separated from mine, my dear? Are you thinking of leaving me or of becoming economically independent?" That might have spoiled a long and affectionate association.
It is too late to do anything about that now, and I do not suggest that wives should be allowed to separate their postwar credits in order to qualify for earlier repayment. It was one of the matters which arose when my right hon. Friend the Member for Bishop Auckland decided upon the pensionable age, and it is not without interest that my right hon. Friend the Member for Colne Valley (Mr. Glenvil Hall) raised this matter in his speech. If the ages for repayment are now to be equalised, that can only be done by bringing the age for men down from 65 to 60, which my right hon.


Friend the Member for Colne Valley suggested, and which I commend to the Chancellor for his further consideration.
Now I come to the present. What is to be done? What is being done now? There has been much discussion on whether the age basis should be continued. My hon. Friend the Member for Stockton-on-Tees (Mr. Chetwynd), in a well-informed and interesting speech, put forward alternative ideas which are held by him in common with other hon. Members. However, repayment by reference to age has become rather established by tradition in the last decade. The basis was set by my right hon. Friend the Member for Bishop Auckland.
There was a special significance about repayment at pensionable age. I was attracted by it as being very sensible and appropriate as a kind of retirement gratuity. When a person reached the pensionable age there was a lump sum for him when he would be giving up full-time work and going into retirement. It had a sentimental as well as an economic appeal. My hon. Friend the Member for Stockton-on-Tees suggested that once we got away from pensionable age we cut adrift from any moorings and that the age could then be anything. It would be quite arbitrary after that and we should just have to decide on what steps downward we would take.
Although I have had many other ideas under consideration at different times, like many other hon. Gentlemen, I must recall that the Trades Union Congress has repeatedly expressed itself in favour of a gradual reduction of the age of repayment and has not given support to alternative methods. I believe that the Labour Party is on record as desiring reduction in the age limit for repayment of post-war credits. I am not certain about the Conservative Party. I know it gives its Ministers a rough time now and again. I believe that one Minister had a rough house at a Conservative conference on this very question of postwar credits. Whether the Conservative ladies did any more than wave their umbrellas frantically and aggressively, and whether they defined anything in the midst of their indignation, I do not remember. I think the Minister came away with a firm impression that a lot of people at the conference wanted

earlier repayment of post-war credits. I will leave it at that.
There are pitfalls in some of the alternatives, such as transferability. If post-war credits are converted into negotiable stock, are we not really depriving the Chancellor of the Exchequer of any further opportunity of outright repayment? If the stock is to be dated it must presumably bear, as the hon. Member for Dover (Mr. Arbuthnot) suggested, the date upon which the credit will mature, by reference to existing conditions. I suggest it would make it extremely difficult for the Chancellor, after having done that, to announce lower ages for repayment in future.
If he were to do such a thing, there might be considerable speculation and traffic in post-war credits just before a Budget if a lot of people thought the Chancellor was about to reduce the ages and that, therefore, credits which they held would mature sooner than had been anticipated. Having bought them at a discount because of the length of time anticipated before repayment, they might make a capital gain on the eventual maturity of the post-war credits at a date earlier than expected. That is a very big drawback to the suggestion.

Mr. Arbuthnot: I was not suggesting that there should be a further reduction in dates once the post-war credits were negotiable. Once the Chancellor felt he had more money at his disposal, other competitors would come into the field and would be satisfied.

Mr. Houghton: I fully understand the position of the hon. Member. It may become a choice in the minds of postwar credit holders between having their credits turned into a negotiable instrument they might be able to dispose of only at a discount, and relying on this and future Governments accelerating outright repayment of the credits they hold. I should not venture to judge what the majority opinion of post-war credit holders would be.
Since these credits came into existence, many people holding them have been growing older. [Laughter.] My hon. Friends seem to be amused. There seems to be some merriment at my glimpse of the obvious, but there is a point in what I am saying. These people


are getting nearer to the date of repayment by age, not only to the new ages, but to the ages which were fixed before. That might confuse the method of outright payment rather than conversion into a negotiable instrument.
In whatever circumstances post-war credits were converted into negotiable instruments, it would be necessary to protect a lot of people from selling their credits at throw-away prices. There would be some sharks getting to work in this field unless there were stringent conditions of transfer only through recognised discount houses, or by other means, which would he a protection against the exploitation of many people who are ignorant of these matters.
Various other suggestions have been made as to what should be done when repaying the money. The hon. Member for Dover suggested that the money might be transferred into Premium Bonds. Here I must allow to emerge the Nonconformist conscience of many constituents of Sowerby who, on moral grounds, would resent such a transfer. They would wish to withdraw immediately and a great deal of unnecessary clerking would be involved. I do not suggest that their moral indignation would lead those people to renounce their post-war credit claims, but they would want them repaid as soon as possible.
My hon. Friend the Member for Stockton-on-Tees made another interesting suggestion which was that they should be transferred into National Savings Certificates. Thereby there would be discouragement against turning them into cash and spending them. It was intended originally that the post-war credits should go into an investment account. At no time, I understand, was a proposal made that they would be paid out in cash. Obviously in changing years, however, there are different attitudes.
We must be careful about placing unnecessary clerical work on Government Departments which might result if money is put into National Savings Certificates and a lot of people go to post offices to ask for applications for withdrawal. There have been other suggestions made in the debate which, no doubt, the Chancellor will consider. I suggest to him that he ought now to set his course so that there will be a general understanding of what

is to happen about post-war credits. If he is convinced that age is the best method, he and later Chancellors ought to stick to age rather than that we should have the uncertainty of an alternative way of discharging the obligations of the State in future.
The right hon. Gentleman, under regulations to be issued in connection with the Bill, is bringing down the ages from 65 to 63 for men, and from 60 to 58 for women. Could he have gone further now? He has raised the question of administrative difficulties and I shall refer to that in a moment, but I think he could have laid down a programme. He could have said that it would be two years now and one next year and made a programme for repayment which would have given a reasonable measure of assurance for the next few years.
The hon. Member for Dover said that would give the Chancellor no room for manoeuvrability and that inflationary tendencies might develop. Surely, if there is anything in the Budget at all, it must be the beginning of an expansion which is to last for some time. Is it the underlying suggestion of the hon. Member for Dover that after this boost to increased production and expansion of the economy we are likely to be thrown back into inflation?

Mr. Arbuthnot: Excessive wage demands might create inflation any time.

Mr. Houghton: The Chancellor of the Exchequer has not based his Budget on the assumption that wage demands will hit it sideways within the next few months. I know what the Chancellor is waiting to say. He is waiting to utter the conventional warning that if they are too big, or come too quickly, they might injure the economy. He wants to remind the House—I do it for him, if he will allow me of the several utterances he made in the course of his Budget statement to that effect. It is curious that large tax reductions—amounting to many more millions than are involved in these post-war credits—are expansionist, whereas repayments of post-war credits are possibly inflationary. I am at a loss to understand why there should be that distinction between what is released by reduced taxation and what is released by repayment of post-war credits.
I want to deal for a moment with the very troublesome question of arrears. Cases have arisen in the experience of a number of hon. Members, on both sides of the House, in which people have gone to draw their post-war credits and have been shocked to find that a tax arrear, which they had either forgotten or never knew about, has been set off against the money to be repaid. It is more grievous still when that occurs in the case of a widow who has not been able to find her way around her husband's papers and might find it a painful experience to have to try. Such people are most distressed. I have had experience of some very moving cases in which this has occurred. The widow has been absolutely helpless in contesting the Revenue view that some tax arrear of 1942 was never paid.
Although the Inland Revenue did its best to satisfy claimants that arrears did exist and went into them in detail, obviously claimants could not feel fully convinced that that was so. Widows have said to me, when told that arrears of tax would be deducted from post-war credits, that their husbands had told them that should anything happen to them they would have their post-war credits, and then they found that they were so much less. Cannot the right hon. Gentleman make a generous gesture in this matter?
I know that this would offend the principles of equity in relation to those who have had their credits in the past, but I remember the then Chancellor of the Exchequer, Sir Stafford Cripps, making a clean sweep of all Income Tax arrears which were being demanded from men who had served in the Forces during the war. He must have used powers given to him by the Income Tax Act to sweep away some millions of arrears of tax. The decision took effect at midnight on one fixed date, and those who had paid their arrears the previous day could not ask for them back. It was arbitrary, but Sir Stafford Cripps decided to do that in order to get a contented body of returning men and women from the Forces who had tax arrears charged against them and who, like the post-war credit holders, had little means of ascertaining the correctness of what they were asked to pay.

Mr. Gower: The hon. Gentleman was somewhat critical when I put forward that point of view.

Mr. Houghton: I was not critical. 1 was merely asking the hon. Member what view he had on this question of past cases.
The hon. Member for Bedfordshire, South (Mr. Cole) made another interesting suggestion. He suggested that if these arrears are to stand against post-war credits, the sooner people know about them the better, and that they should not be saved up until they or their widows claim the money. I entirely agree with that suggestion. He did, however, suggest that an announcement should be made in the various tax returns, and so forth, asking those who wish to have their postwar credits checked up to write in and ask for that to be done, but many of those who have post-war credits probably do not get Income Tax forms these days, and they would not be fully covered on this ground.
A more practical way is that the Inland Revenue itself should notify those holders where tax arrears are believed to exist. As I understand it, that information is on the record now and anyone claiming a post-war credit now will be told at once that an arrear stands against him. Can the holders not be informed in advance of claiming their credits that there are arrears standing against them, so that that can be cleared up without further delay and not left for another five, ten or fifteen years when it would be too late for the details to be gone into with any clarity or accuracy.

Mr. Cole: The suggestion which the hon. Gentleman has just made brings us back to the point made by my right hon. Friend that it would mean the Inland Revenue checking all post-war credit holders to find out whether there were arrears against them. I imagine that would be a tremendous task. I think that they are in files and not in ledgers. My suggestion was that the Inland Revenue should say, "If there is any doubt, come to us and we will check up."

Mr. Houghton: I would not recommend people in doubt to rush to the Inland Revenue to have their doubts confirmed or dispelled because 99 per cent. would be dispelled and there would be no need for that at all. We must not exaggerate the number of cases involved.
There is no difficulty in doing what I suggest except the amount of work


involved. I think that taxpayers who are later to be confronted with tax arrears ought to be given the opportunity of going into them without further delay. Many of these arrears took place when, as my right hon. Friend the Member for Come Valley said, workers were moving about the country from war work to war work, and in some cases were concerned with as many as five to a dozen different tax offices during the course of the war. It has been a most intricate job to bring all the credits and the tax liabilities together into a central office.
That brings me to the question of administration. I am very grateful to the hon. Member for Bedfordshire, South for the tribute which he paid to the staff of the Inland Revenue. I feel that it is a little bogus my being at this Box today because, as the House knows, I am the Secretary of the Inland Revenue Staff Federation and it is the members of that organisation who will have to do this work. It makes me doubly grateful to be here and listen to a tribute to the staff of a department with which I have, in this way, been connected for thirty-seven years. These are very big problems of administration. There are a million hours of work in what the Chancellor has decided to do in the repayment of postwar credits.
That work has to be done mostly on overtime. It will have to be done, as the previous payment of post-war credits was done, during the months when the weather, we hope, will be getting better and brighter and when the staff are not quite so reconciled to working very long hours. This work will be done to timetable, cheerfully and efficiently. I suggest to the Chancellor that he ought now to make more permanent provision for future operations for the repayment of post-war credits.
Several times during the Chancellor's speech he suggested to the House that he was inhibited from taking certain alternative courses or pursuing his present course more freely on account of administrative difficulties. That I can fully confirm. Had the Chancellor decided to repay five years of post-war credits this time instead of two, the work would have to be staggered. It could not have been completed to the timetable on which this work can be completed.
That leads me to suggest that, unless there is some kind of post-war credit staff reserve, he will never be free to do anything on a substantial scale. The day may come when he will wish to do more than he is doing now. In any case, there will be a higher normal level of repayment of post-war credits in future if the Chancellor or any successor contemplates reducing the age limit and it will help if he has the staff to deal with one or two years extra each year or every two years. Something can then be done.
When the quinquennial repayment for property took place, the staff had to be imported in order that the job could he done when it reached its peak. This is a question of administration and one to which the Chancellor should pay attention. He must put his Somerset House in order to enable it to respond to what the House and the country requires in the matter. As my hon. Friend the Member for Stockton-on-Tees said, administration should not be allowed to stand in the way of whatever the economic situation, social justice or the will of the House may require and in order to do that he must certainly put the Inland Revenue in a better position to do the job that it is now.
There are two points of detail with which I should like the Financial Secretary to deal. Nothing has been said about the normal application for the refund of post-war credits, that is to say, those who now in the next days and weeks will be reaching the age of 65 for men and 60 for women. The Chancellor, in his opening speech, rather counselled everyone to wait and not press around, and he suggested that anyone now coming for repayment in the ordinary way would get repayment without waiting. I think that should be made clear and I hope that the Financial Secretary will be able to confirm it.
The second point has been referred to by several hon. Members and it concerns the period of twelve weeks of National Assistance..1 understand that those who will be entitled to hardship repayment who have been on National Assistance for twelve weeks will be those whose continuous period of National Assistance ended from 7th April.

Mr. Amory: Ended after 7th April.

Mr. Houghton: In other words, those who had been on National Assistance for


eleven weeks before Budget day and had their twelfth week on National Assistance in Budget week will qualify for repayment on hardship grounds. I think that that puts the position beyond peradventure. There was a belief in some quarters that in order to qualify the continuous period of twelve weeks on National Assistance must be wholly after Budget day.
We welcome the Bill. It has had a very warm welcome from both sides of the House. We shall watch the conditions which are laid down in the regulations when they are brought before the House and the progress of the work, and we sincerely hope that whoever holds office as Chancellor of the Exchequer in future years will be able to make further bold steps forward to discharge what the hon. Member for Preston, South (Mr. Green), in a speech last week, referred to as a " moral obligation ". I cannot do better than end on the words which the hon. Member used, which were:
I am delighted that it is this Government that has taken the first step towards doing it, although I accept at the same time that the Opposition would have done the same in the same circumstances. I do not think that this is a terrific party point between us. It is a moral commitment that is being met, and the whole House can take pride in it."—[OFFICIAL REPORT, 8th April, 1959: Vol. 603. c. 328.]

6.42 p.m.

The Financial Secretary to the Treasury (Mr. J. E. S. Simon): My right hon. Friend is very grateful for the kind welcome which the House has given the Bill and for the very agreeable things which hon. Members have said about him personally. It was the French finance minister Colbert—one of that small band of great finance Ministers which my right hon. Friend is rapidly qualifying to join—who said that the art of taxation lies in so plucking the goose as to get the maximum amount of feathers with the minimum amount of hissing. There is no question but that post-war credits in recent years have provoked a great deal of hissing—indeed, more than is healthy. It is not much exaggeration to say that they have been poisoning relations between the public and the Government, and that is dangerous, particularly in a democracy.
I do not think that anyone except an outright masochist enjoys being taxed. But people do reconcile themselves to their fiscal burden provided that they feel that

the system, however onerous, is equitable —fair as between one taxpayer and another, and fairly administered by authority.
There is no question but that the treatment of post-war credits since the war has caused widespread resentment. We all know the reason for the slow rate of repayment. But the creditor not only regarded the credit as his own money, withheld from him by the Government without even any interest being paid on it; in addition, he naturally blamed successive Governments for the inflationary conditions which until now have prevented any accelerated repayment. In short, he regarded the whole thing as a swindle—as the right hon. Member for Smethwick (Mr. Gordon Walker) said, "almost a public default."
Such an attitude, it seems to me, is bound adversely to affect a citizen's general bearing towards the State and the political community. It is with those thoughts in mind that the House has welcomed so wholeheartedly this Bill and the comprehensive process of dealing with the problem which it represents.
Before I discuss points which have been made on the Bill, there is one comment which I should make in answer to the hon. Member for Sowerby (Mr. Houghton), whose great wealth of experience is so valuable to the House, particularly on this kind of occasion. The normal applicants for post-war credits—those applying at the age of 65 for men and 60 for women—are not affected by the Bill. They do not have to wait until 4th May. They will make their application to the Inland Revenue in the usual way and will be repaid in the usual way.
I ought also to say a word or two about the alternatives to the scheme which have been suggested in the debate. The hon. Member for Stockton-on-Tees (Mr. Chetwynd) put forward a scheme for the repayment to everybody of a whole year's credits in the first year, and then successively over the years which the credits represent. I hope that he will allow me to say that it seemed to hon. Members on these benches a very well informed and constructive speech. I thought that he was very much better employed here making that speech than irrupting into my constituency with the kind of border warfare from which I have been suffering last week, if I may judge from my local newspaper.

Mr. Chetwynd: I hope that my activities last week are far more successful than my activities today appear to have been.

Mr. Simon: The hon. Member answered himself in his own speech when he said that his scheme would mean taking four or five bites at the same cherry. A number of hon. Members have paid a tribute to the Inland Revenue's administration of this scheme, and have recognised generously the burden which it places on the Inland Revenue, and the ready way in which the Inland Revenue is assuming the burden. The right hon. Member for Colne Valley (Mr. Glenvil Hall), who was himself a Financial Secretary to the Treasury, the hon. Member for Orkney and Shetland (Mr. Grimond), my hon. Friend the Member for Bedfordshire, South (Mr. Cole), the hon. Member for Feltham (Mr. Hunter), and the hon. Member for Sowerby have all paid tribute to the Inland Revenue. As the Minister immediately responsible for the Inland Revenue, I am grateful for what has been said, and I pay my own tribute.
It is against that background that we have to measure the difference between the scheme put forward by the hon. Member for Stockton-on-Tees and my right hon. Friend's scheme. Our scheme involves the investigation of about 1·4 million post-war credits. The hon. Member for Sowerby described what that will mean in overtime working during the summer by the Inland Revenue. In addition, the Inland Revenue must get this out of the way before the autumn pressure in connection with the ordinary seasonal preparation of next year's tax affairs.
Under the hon. Member's suggestion we should have to investigate every one of the 11 or 12 million credits which are outstanding. Nor would that be the end of it. Under the scheme initiated by the right hon. Member for Bishop Auckland (Mr. Dalton)—which we are no more than extending—once a creditor has been repaid he is removed from the books of the Inland Revenue. Under the other scheme, as the hon. Member himself recognised, the creditor might well remain on the books of the Inland Revenue, and 11 or 12 million credits would have to be investigated all over again at the time of the repayment of the next year's

credits. Therefore, it seemed to me, as I think that it seemed to most hon. Members, a very wasteful way of dealing with the problem.
Further, as the hon. Member for Sowerby suggested, there is a great deal more to be said for the idea of a progressive reduction in the qualifying age than the hon. Member for Stockton-on-Tees would allow. It is true, as the hon. Member said, that the original ages of 65 for men and 60 for women had a particular appropriateness, as those were and are the retiring ages, and, therefore, the credits would be especially welcome at that time. But in a situation in which repayment cannot be made to everybody at once, it seems only reasonable that, subject to the hardship cases, the oldest should be repaid first. After all, what we should like to see would be that those who paid the extra tax in the war years should get the money back while they still have some years left in which to enjoy it. The best way of achieving this is to give priority to those whose expectation of life is likely to be shortest. Therefore, it seems to me, both on principle and because of the enormous administrative advantage, that the present scheme, as extended by my right hon. Friend, is considerably preferable.
A number of hon. Members—my hon. Friend the Member for Dover (Mr. Arbuthnot), the hon. Member for Orkney and Shetland, my hon. Friend the Member for Barry (Mr. Gower), my hon. Friend the Member for Bedfordshire, South and the hon. Member for Huddersfield, West (Mr. Wade) —canvassed and advocated the idea of conversion into negotiable securities.
To appreciate the full implications of this suggestion one would want to see a concrete scheme fully worked out. My right hon. Friend is not prepared at this stage to rule out all possibility of such a scheme for the future. Indeed, as he suggested, he will carefully consider all the suggestions put forward today.
I think it right to indicate a number of very serious objections that there are to such a proposal. First, in spite of what has been said by a number of hon. Members, such a scheme would have an inflationary tendency, for the reasons given by the hon. Member for Stockton-on-Tees and my hon. Friend the Member


for Totnes (Mr. Mawby). As the hon. Member for Stockton-on-Tees said, many of the holders would sell their credits because they wanted the money to spend. I do not say that all of them would, but many would. The buyers would be likely to be people seeking a means of investing their capital, and who would have invested it in other ways—perhaps in other Government securities—if this means had not been available. As my hon. Friend the Member for Totnes said, such a scheme has an inflationary tendency also in that the negotiable instrument could be used as a means of getting security for an advance. There fore, a scheme for conversion into negotiable securities could be considered only in a situation where some such reflationary measure was called for. In such a situation it seems to me that repayment in cash would be just as appropriate and much more straightforward.
Secondly, it would not be possible to prevent sales of the securities at unreasonably low prices to speculators trading on the ignorance of the creditors. I know that my hon. Friend the. Member for Dover envisaged that objection and his scheme, which was completely thought out, ended at the point where a date was put on the security. So the next objection does not apply to the scheme put forward by him, but I think that it applies to the scheme put forward by other hon. Members. If after the transaction the repayment of the credits was substantially accelerated, the original creditor would feel considerable resentment. Indeed, it might very seriously inhibit the freedom of action of the Chancellor in deciding whether to accelerate payment.
Thirdly, as the hon. Member for Sowerby pointed out, purchase of the security at a discount would result in a tax-free appreciation to the purchaser.
Fourthly, since interest is now to be paid on the credits free of Income and Surtax, it would not be desirable to allow, say, high Surtax payers to buy up appreciable quantities of the credits. The same argument would apply, to a lesser degree, even if the interest were free of Income Tax but not Surtax.
Fifthly, and perhaps most cogently, to make the credits negotiable securities would mean that they would have to be

checked by the Inland Revenue, as on repayment. Certainly, until the transactions contemplated by my right hon. Friend's proposals have been disposed of, there could not be any question of undertaking such a task. Indeed, to put on the Inland Revenue the burden of checking the credits of all those who might want to realise them at a discount would involve very considerable additions to the staff.
Those seem to me to be serious objections, although my right hon. Friend has not closed his mind on the subject.
My hon. Friend the Member for Dover suggested also that the post-war credits should be converted into Premium Bonds. Premium Bonds are repayable on demand, so that again would amount to a general release of the credits, with consequent inflationary effects. It would involve again a very heavy administrative burden on the Inland Revenue. Further, as the hon. Member for Sowerby very entertainingly pointed out, some creditors might possibly have a conscientious objection to holding Premium Bonds. So some alternative security would have to be made available. There is another, and I think even more fundamental, objection, namely that Premium Bonds pay an effective rate of 4 per cent., whereas we do not propose under our scheme to pay more than 2½ per cent.
The suggestion was made for payment of the credits when repaid into the Post Office Savings Bank. As the right hon. Member for Colne Valley reminded us, that was the original intention in Sir Kingsley Wood's Budget speech, although it was not reflected in the Finance Bill. Anybody can pay his credit, when he receives it, into an account in the Post Office Savings Bank. We propose to send out with the repayment a form telling the creditor who has been repaid how he can invest in National Savings. I hope that the House will feel that that meets the point that has been made.
I come to the very difficult question of the disappointment caused to a certain number of creditors when they find that the amount which they are to be repaid is not the total shown on the front of the certificate. The hon. Member for Sowerby was quite right when he said that we must not exaggerate the number involved. There are very few of them, although they come particularly and


indeed poignantly to our notice when we have to deal with our constituents on this question.
Post-war credit certificates were issued by Inspectors of Taxes as soon as possible after the liability had been computed. The House will remember that the first two years of the post-war credit scheme were before P.A.Y.E. was introduced. Collection, therefore, did not begin until after the liability had been computed. That meant that certificates were often issued before collection had been completed. The certificates therefore included—I have one here—as the right hon. Gentleman the Member for Colne Valley quite rightly reminded us, a statement that the right to the credit depended upon payment of tax. I have the words here:
The right to post-war credit depends on the payment of the full amount of Income Tax due for the year.
The object of issuing the certificates early was psychologically important during the war—to bring home to taxpayers the fact that the credits really existed. I know the difficulties in these cases. As my right hon. Friend said, one cannot really repay what has never been paid, and there are the past cases where it is almost impossible to re-open the transaction. And one has to consider the people who did pay their taxes in the year. My right hon. Friend is very sympathetic with this problem and will carefully consider the various suggestions made in this debate as to how it might be dealt with.
The loss of the post-war credit certificate is not, of course, fatal to the claim. The claim form that we are proposing to send out, and which will be in the post offices after 4th May, tells people what to do if they have lost their certificates—

Mr. Chetwynd: Could the form, when available, please be sent to hon. Members?

Mr. Simon: I will certainly consider that.

Mr. Houghton: If copies were available in the post office in this House we could got them in the ordinary way, whether or not we qualify for repayment.

Mr. Simon: If I may say so, with respect, that seems to be the sensible way.
I now come to the scheme itself and. first of all, to payment on death. The right hon. Member for Colne Valley asked about the liability to Estate Duty of post-war credits that are paid on death. I can assure the House that post-war credits are not now and will not be subject to Estate Duty. The position has always been that they shall be liable neither to Estate Duty nor to any other form of tax, and nothing in the Bill changes that.
Next, my right hon. Friend proposes to lower the ages. I would point out that repayment on death is equivalent in money to lowering the age for two years—

Mr. Wade: I would not like the public to misunderstand this point about Estate Duty liability. Where a post-war credit becomes due and death occurs before payment is made, I suppose that that credit will have to be treated as part of the Estate as the payment has not arisen out of the death?

Mr. Simon: I would not like to give a snap answer, but on general principles, I should think that that would be so.
The right hon. Gentleman the Member for Smethwick suggested that there should be automatic lowering of the age by one year annually, and the hon. Member for Sowerby said that we should have laid down a programme. That seems to me to be open to serious objections. There is nothing to prevent any future Chancellor annually lowering the age by one year, but I think that it would be objectionable if my right hon. Friend were to commit any future Chancellor. As I say, there is nothing to prevent the gradual lowering of the age, but the present system does retain the flexibility that might, in certain economic circumstances, be desirable.
I now come to the hardship cases. My right hon. Friend is very grateful to the response made by the whole House to his plea that he should not be pressed to extend the classes for this year. I was very encouraged by the fact that two hon. Members who have particularly devoted thought to this matter—the hon. Member for Stockton-on-Tees and my hon. Friend the Member for Totnes—said that they could not think of any other clearly definable class that might have been put in this year. We will, of course, consider any suggestion that has


been made to us to see whether there is any other class which is clearly definable by objective standards, although I think that those suggested by the right hon. Gentleman the Member for Smethwick would be very difficult to administer.
The question of National Assistance, on which there were clearly considerable misapprehensions, has been completely cleared up by the hon. Member for Sowerby. But perhaps it should come from this Box that those who will qualify under the National Assistance head are people who, for a continuous period of twelve weeks ending after 7th April have been receiving National Assistance. It matters not if the great bulk of the period was before the Budget. Provided that this continuous period leads into the period after the Budget, those people qualify. We will also consider the point made by the hon. Member for Stockton-on-Tees about sending the forms to the National Assistance officers.
I find it very difficult to say how many blind people and those having constant attendance will qualify. The average credit is under £50, and we estimate a figure of £2 million under all these heads, which will give the House a general idea of the number who might qualify. Under all these heads, I have in mind a figure of about 100,000.
The question of interest was really the one controversial matter, although it was not taken up by any speaker other than the right hon. Member for Smethwick. He said that the interest should be free of Income Tax but should not be free of Surtax. The real argument against charging Surtax is an administrative one. The cost of collection would not repay the revenue that would be derived. Therefore, unless one does regard Surtax as a penalty, as something imposed just to larn " the creditor to be a toad," every argument goes against charging Surtax on the interest—

Mr. Glenvil Hall: Is not another reason for doing what the Treasury suggests that the interest will accrue year by year and will be paid finally only when the credit is paid; and that it is very unfair to the Surtax payer to have it all piled on then?

Mr. Simon: I am much obliged to the right hon. Gentleman, who has great experience of these matters. That is exactly what I had in mind.
The analogy here is much closer to the Savings Certificate than to the Savings Bank deposit. In the case of the Savings Bank, the interest is declared annually and, therefore, for tax purposes comes into the gross income, and there is no reason why Surtax should not be charged on it. In the case of Savings Certificates, where the interest accrues from year to year and is only paid out at the end, it would mean that all the Surtax assessments, for many years past, possibly, would have to be reopened. I must say that that seems to me to be an almost conclusive argument against trying to charge Surtax on these comparatively small sums that are involved.

Mr. Gordon Walker: What would be the effective rate to the Surtax payer?

Mr. Simon: If the right hon. Gentleman will put that Question down, I will try to answer it, but I will certainly have the information for the Committee Stage.
The hon. Member for Feitham wanted to see the interest back-dated to 1945. Again, that is not feasible on administrative grounds. These are quite small sums of interest, and it would mean the reopening of all the credits that have been repaid—many millions of them—in all these years.
The final point that was made on our proposals was on legislation by Statutory Instrument, and particularly by negative Resolution, and was made by the right hon. Gentleman himself and by the hon. Member for Orkney and Shetland. It is in accordance with precedent in this type of Bill to proceed by negative Resolution. This is a Bill which releases money rather than imposes taxation. But my right hon. Friend will reconsider the matter in the light of what has been said, and perhaps we can discuss the matter again on the Committee stage.
I am grateful for the very helpful suggestions that have been made and for the very pleasant way in which this Bill has been received. I believe that my right hon. Friend's proposals are a salve which will take the sting and poison out of this long-running sore. They deal with the problem comprehensively. They accelerate the rate of repayment, repaying in this year alone over one-fifth of the outstanding credits. They give increased hope of future repayment, provided, as the hon. Member for Orkney and Shetland reminded us, we do not again return


to inflationary conditions. They provide for repayment in a number of cases of hardship where the withholding of the credit has particularly affronted the public conscience. And, perhaps most important of all, by the payment of interest on outstanding credits, they make the whole transaction again respectable. I therefore unhesitatingly commend the Bill to the House.

Question put and agreed to.

Bill accordingly read a Second time.

Bill committed to a Committee of the whole House.—[Mr. Finlay.]

Committee upon Monday next.

Orders of the Day — INCOME TAX (REPAYMENT OF POST-WAR CREDITS) [MONEY]

[Queen's Recommendation signified.]

Considered in Committee under Standing Order No. 84 (Money Committees).

[Sir CHARLES MACANDREW in the Chair]

Resolved,
That, for the purposes of any Act of the present Session to make further provision for the repayment of post-war credits (including credits to building societies), it is expedient to authorise—

(a)the payment out of the Consolidated Fund of sums required for making payments under that Act (including payments of interest);
(b) the raising of money for the purpose of providing or replacing sums issued out of the Consolidated Fund under that Act otherwise than in respect of interest;
(c)the payment out of moneys provided by Parliament of any increase attributable to that Act in any administrative expenses defrayed out of such moneys. — [Mr. Simon.]

Resolution to be reported.

Report to be received Tomorrow.

ADJOURNMENT

Resolved, That this House do now adjourn.—[Mr. Finlay.]

Adjourned accordingly at a quarter past Seven o'clock.